Last week’s official visit to Guyana of Surinamese President Chandrikapersad Santokhi and a number of ministers saw the issuing of a joint communique on August 19 setting out the positions of the two sides on major issues.
A key segment of the communique pertained to the oil and gas sector in the wake of the major offshore discoveries for both countries in the Guyana-Suriname Basin and the prospect that revenues will spark major economic expansion while they navigate the likely diminishing global demand for fossil fuels together with the need to balance extraction with their climate change obligations.
The following points pertaining to oil and gas were agreed by Presidents Ali and Santokhi:
1. Their Excellencies noted that the oil and gas sector of Guyana and Suriname held the promise of transformational development opportunities for both countries and agreed that taking advantage of the emerging synergies in the sector was of utmost importance to both accelerate and deepen the prospects engendered by the development of hydrocarbons offshore. In that regard, they discussed a possible framework for joint actions/strategy, joint ventures and the promotion of local content to maximize the benefits from the sector.
2. The Heads of State took the opportunity to further expand their views on the initiatives aimed (at) establishing strategic economic and investment linkages between Guyana and Suriname to take advantage of possible savings from the avoidance of duplications in the areas of infrastructure to facilitate the production of electrical energy from natural gas to promote manufacturing and the creation of petrochemical industry as well as the refining of natural resources such as bauxite; and the exportation of surplus clean electrical energy.
3. Within two weeks a working group will be established to pursue concrete proposals for a joint gas strategy (inclusive of gas-to-shore infrastructure and the establishment of a plant to generate electricity from natural gas) and a Sub-regional development strategy.
4. They emphasized that coupled with the construction of the Corentyne River Bridge, the creation of a joint frontier development strategy focused on East Berbice in Guyana and Nickerie in Suriname were components that were pivotal to an over-arching strategy aimed at harnessing the natural resources and human capital assets of Guyana and Suriname to accelerate the prosperity of both countries and their peoples. They therefore directed that a new working group on oil and gas (be) created and convened.
A possible framework between the two countries for joint actions and joint ventures and the promotion of local content in oil and gas could be ground-breaking in the context of CARICOM and the integrating of particular aspects of the two economies. As an aside it should be noted that more than a year after it entered office, the PPP/C government is still to deliver the legislative framework that it promised on local content.
The intent to avoid duplication of infrastructure to facilitate production of electricity from natural gas to promote manufacturing and the creation of a petrochemical industry as well as the refining of natural resources such as bauxite and the exportation of surplus clean electrical energy also raises problematics and opportunities. Natural gas remains a questionable option for both Guyana and Suriname considering that its burning will add to the climate change burden and the scale of the investment will lock this country into this transitional fuel for decades whereas its greatest efforts should be expended on renewable, green energy.
If the Guyana Government was still to proceed with its natural gas plans, Guyanese are yet to be convinced that the proposed expenditure of US$900m is justifiable. It is also likely that this figure is underestimated considering likely financing charges. Furthermore, nothing over the last year and in the previous incarnations of this government will easily convince the populace that the PPP/C administration is capable of successfully managing a project of this scale considering the attendant safety, environmental and economic jeopardies.
While an integration of regional bauxite economies had been an aspiration of the earliest founding fathers of CARICOM and its predecessor, it remains to be seen whether refined products in this part of world could trigger light industry manufacturing or other applications. It is an area that should be pursued by the two countries with an eye on the possible participation of Jamaica.
The two sides have agreed to the establishment of a working group to pursue concrete proposals for a joint gas strategy inclusive of gas-to-shore infrastructure and the setting up of a plant to produce electricity from natural gas. This commitment will immediately raise questions about how it gels with the current plans for the Wales gas-to-power facility. Will Wales be a standalone and separate from collaboration between the two countries in the eastern sector?
The proposal for a joint frontier development strategy underpinned by the construction of the bridge over the Corentyne River and focused on East Berbice and Nickerie holds interesting possibilities. With the decline of the sugar industry in Berbice, thousands of families have been left without job opportunities and earnings. Were co-operation between the two countries to bring light manufacturing or export oriented industries to East Berbice it would represent a significant breakthrough for the region and much-needed diversification from rice and sugar. It is now left to be seen how quickly the new joint working group on oil and gas is created and how it navigates considering that the Parliaments of the two countries will inevitably have the final say on the pace at which activities develop if at all.
