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Would Forming a State Oil Company Be Good for Guyana?
Guyana is considering the formation of a state-owned oil firm to help manage its offshore oil deposits. ExxonMobil’s floating production storage and offloading (FPSO) vessel, the Liza Destiny, is pictured. // File Photo: ExxonMobil.
Guyana is considering the formation of a state-owned oil company to manage its offshore crude deposits, Vice President Bharrat Jagdeo said on April 19. In one arrangement under consideration, the government would grant licenses to a new state-run company, which would work with a “strategic partner,” possibly from the Middle East, in the development and extraction of offshore oil. What would the creation of a state-run oil company mean for the South American nation? Would Guyana invest in the equipment, technology and know-how necessary to create a self-reliant oil firm, or would it rely on foreign partners to develop the resource? Is Guyana on course to avoid the “oil curse” that has hobbled some other resource-rich nations?
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Jan Mangal, oil and gas consultant and former petroleum advisor to the president of Guyana: “There are numerous reasons why Guyana should not develop a national oil company (NOC) in the short-term, or even over the long-term, due to the climate crisis. Developing a NOC would be putting the cart before the horse. Guyana failed at most prerequisites for a successful industry. And I define success as an industry that benefits the people and future generations, and does not only benefit the oil companies, local business elites and politicians. Success also requires an industry that recognizes its impact on the climate and constrains production. Guyana failed to negotiate fair oil contracts even when it had complete leverage over ExxonMobil in 2015-2016. Guyana failed to award oil blocks in a transparent, public manner and in ways to maximize revenues for the country. After seven years, it still failed to…”
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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewables, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere and beyond. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.
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