We are being told by UWI’s (St Augustine) economist, Dr Roger Hosein, that the oil production potential of the hydrocarbon discovery made in Guyana is of the order of 4 billion barrels of oil, which translate into a production of some 350,000-barrels per day (b/d) by 2025.
Trinidad and Tobago, the traditional hydrocarbon producer in the region was just able to produce 240,334 b/d as its top production level in 1978.
When this level of production seeps into the economy of Guyana, its economic growth rate is expected to jump to an average of 22.9 percent, while its non-oil growth rate would be 4.7 percent. Between 2020 and 2023 the Guyanese government is expected to garner some US$1.7 billion, which will improve after the cost recovery stage is completed.
Dr Hosein’s advice is that Guyana should place its earnings from this industry into a sovereign wealth fund where expenditure is related more to the interest paid on this asset. Further, money needs to be spent on upgrading its infrastructure and surely also in upgrading its non-energy sector such that it can generate export companies since the existence of oil does not necessarily mean that it can all be sold into the future, given the increasing impact of renewables on market demand.
However, Guyana may have found itself in a possible conflict situation in which its massive newfound oil can contribute to the carbon emissions that are damaging the world’s climate, while that country subscribes to agreements that seek to limit, for our survival, increases in global temperature to within 2.0 degrees Celsius. Even today we are experiencing the results of climate change; extraordinary high temperatures in the north, more powerful hurricanes, sea level rise, damage to glaciers, coastal erosion, salt water intrusion etc.; as I write people are dying in
Japan from the heat as we await with trepidation the coming hurricane season in the Caribbean.
Guyana as a member of CARICOM and together with other members of the Alliance of Small Island States (AOSIS) are pressing for keeping global temperature rise to within 2.0 degrees Celsius above pre-industrial levels as provided for in the historic Paris Climate Agreements.
Hence, Prof AL Binger, as interim executive director of the Caribbean Centre for Renewable Energy and Energy Efficiency, said that Guyana should not get too excited about the discovery: He wonders how can Guyana, a member of AOSIS, the group that is fighting to keep temperatures under 2.0 degrees Celsius, wish to sell oil which is to be burnt with results that are against the aims of the group. He asks who they, Guyana, are going to sell their oil to.
The rallying call of AOSIS is that, to stay alive, the limit has to be 2.0 degrees Celsius, beyond which small island states will be overwhelmed by severe climate impacts. Hence Binger’s question to Guyana is now that you have oil, what are you going to do with it? We are at the stage now where we just cannot emit any more carbon if we are to remain within the agreed temperature limit.
According to Binger, to keep warming to within this limit requires a reduction of greenhouse gases by 70 to 90 percent relative to 2010 levels by 2050. Total greenhouse emissions have to read global zero by 2060-2080. If we are to achieve this then we should only burn that for which we can sequester its emissions.
This tells us that we cannot burn all the hydrocarbons that we have found; some 80 percent has to be left in the ground (Nature 517, 187-190, Jan 2015). But Guyana is one of the poorest countries in the region and selling its oil offers it the opportunity to grow its economy, improve its infrastructure and even reconstruct its economy into one that is sustainable.
The question then arises as to whose responsibility is it to ensure that the 80 percent is left in the ground? The only driver for this in the global economy is consumption demand, the market, since the producers like Guyana and its partners will sell as long as there is demand – if Guyana does not sell others will.
Hence Guyana, like Trinidad and Tobago may indeed support the need to stop burning fossil fuels, even introduce renewables in their own economies, yet sell oil and gas as they await the market, the consumers, the governments, the innovators, the technology to increase the world’s transfer rate to renewables that will make fossil fuels obsolete.
Still, the US President Trump tells us that climate change is a hoax and he has withdrawn the US from the Paris accord on climate change; the triumph of politics over science.
Mary K King