Dear Editor,
On Monday, Apache Corporation’s share price plummeted after the company released a “vague” update on the results of its exploration well in Block 58 offshore Suriname. The American company’s investors and Surinamese alike had been watching for results like hawks, praying for success like that we have seen here in Guyana. Instead they received an unenthusiastic commitment by Apache to continue drilling deeper in hopes of a find.
I hope that the silver lining of this failure is that it will serve as a wakeup call for Guyana. Sixteen discoveries on, it seems that many have lost sight of the fact that our successes are the exception rather than the rule. On paper, Suriname’s prospects for offshore discoveries should be just as good as ours. Their blocks are part of the same Guyana-Suriname Basin that is home to ours. Apache’s Block 58 is next to our massively successful Stabroek block. An arbitrary border separates them, but geologically they are much the same. The failed well shows that exploration in the basin is not always a sure thing.
To pick up on President Granger’s earlier comments, these results should be sobering for “oil drunk” Guyanese. There has been too little progress since the initial discovery nearly five years ago. First oil is around the corner, yet our government and institutions are scrambling to put frameworks in place to manage the revenues. There is still no plan for how and where we will reinvest the windfall to help combat the infamous resource curse. Fortunately, there will be some delay between first oil and first revenues, giving us some time to improve matters.
Meanwhile, some aggressively call for Guyana to halt approvals for production, force oil companies to the bargaining table and reopen contracts. Now, let me say clearly that I have no doubt that Guyana should and could have negotiated better terms amid the euphoria of 2015 and 2016. But what is done is done, and any fool will realise renegotiating internationally recognised contracts will require significant leverage. Our success is indeed impressive but as news from Suriname shows, the basin is far from “de-risked,” and as of this moment we are not due to produce oil in any meaningful quantity until the mid-2020s.
Moderation and temperance must rule the day. There is a careful and difficult balance to be struck between maintaining our oil industry’s momentum and ensuring that we achieve maximum benefits for the Guyanese people. It is imperative that we make real progress on the Sovereign Wealth Fund and spending priorities, be it infrastructure, education or healthcare. Let us carefully examine political manifestos and pronouncements in coming months and ensure that our government is up to the challenge.
Yours faithfully,
Patrick Davis
