TORONTO – Internationally renowned publication Bloomberg is warning Guyana against falling into the trap of bringing oil onshore because of the complexity of problems that accompany the related infrastructure.
In an article today by Mac Margolis, Francisco Monaldi, a Rice University energy expert, was quoted as saying: “Every minister of development wants to add value to oil…that’s a big mistake.”
According to Bloomberg, Monaldi feels that a tangle of pipelines and refineries is exorbitant, brings marginal returns and makes the host country a magnet for corruption.
The Rice University energy expert pointed to scandals in Brazil’s Carwash corruption probe which investigated contract fraud on a grossly overpriced domestic refinery and petrochemical complex launched amid the euphoria over earlier big oil discoveries.
“Encouragingly, Guyanese seem to be starting their oil boom with few illusions about the fleeting bounty below their feet…the government wisely, if belatedly, set up a sovereign wealth fund to steward the money…hence, the official encomiums to agriculture and forestry, and renewable energy touted to fuel 100% of the power grid by 2040,” Bloomberg observed.
Noting the IMF’s projection that Guyana’s economy will grow by 86% in 2020, Bloomberg said that “metabolizing so much wealth so quickly is like drinking from a fire hose as one engineer put it — would be intoxicating for even the sturdiest constitution.”
“To unleash the potential of the coming oil boom, Guyana must accept that wealth and development are cultivated, not simply extracted…such was the logic behind the Green State Development plan, a wonk’s bet that Guyana can pull off what no other developing nation with an oil bonanza has managed: marshal a massive energy windfall without drowning in riches,” Bloomberg noted.
Guyana, through ExxonMobil, will be pumping 750,000 barrels of oil a day in 2025, making it the fourth-largest oil producer in South America and the highest per capita oil producer in the world.