By 2050 China may dominate Guyana’s oil sector – CSIS
By Abena Rockcliffe-Campbell
Evan Ellis has predicted that within 30 years, China will be a force to reckon with in Guyana’s Oil and Gas sector. This, he said, is likely to be the same in other jurisdictions in Latin America and the Caribbean.
Ellis is a senior associate (non-resident) with the Americas Programme at the Centre for Strategic and International Studies. He is a research professor of Latin American studies.
Last year November, he published a paper titled “The Future of Latin America and the Caribbean in the Context of the Rise of China.”
The paper examines China’s “strategy” in Latin America and the Caribbean. It points out what the superpower has already achieved and what it is likely to achieve within 30 years based on its current trajectory.
While examining the implications of China’s “greatly expanded position” as banker, employer, and military and political partner in Latin America and the Caribbean, Ellis considered some of the possible dynamics by sector.
He looked at agriculture, fishing, mining, construction and logistics, manufacturing and retail, finance and banking, electricity infrastructure, telecommunication infrastructure and petroleum.
Guyana was mentioned in the professor’s examination of China’s interest in Petroleum as well as construction and logistics.
Ellis said that even as the United States increases natural gas exports to Asia through the People’s Republic of China (PRC)-dominated Panama and (new) Nicaraguan canals, PRC-based “petroleum companies are likely to have significantly expanded their positions throughout the region, with major production operations in Venezuela, Brazil, Argentina, and Guyana (offshore), as well as Ecuador, Uruguay (offshore), Bolivia (gas), and Peru.”
Already, China has a stake in Guyana’s oil industry. All of the major discoveries of high quality oil that have been made in the Stabroek Block offshore Guyana. That block is controlled by ExxonMobil, Hess and CNOOC Nexen. CNOOC is owned by China.
Ellis said that by 2050, Chinese companies such as CNPC, Sinopec, and CNOOC will have substantially increased their technical capabilities (in conjunction with advances in the industry in general), in part through the acquisition of multiple smaller companies with claims in Latin America and a number of major commercial petroleum companies already operating widely in the region, including global giants whose acquisition by Chinese counterparts is currently unthinkable, such as ExxonMobil, and Chevron.
Ellis said that in the process of such acquisitions, the Chinese petroleum companies will have absorbed the technical and other capabilities of those it has acquired.
The acquisition of the technical and “other capabilities” to which Ellis referred means that China will no longer have the need to partner with other companies as is the case now with its partnership with ExxonMobil.
Ellis said that by 2050, the PRC’s “world-class petroleum engineering and other services companies will dominate the region, leveraging contracts to the larger Chinese National Oil Companies to expand their position; and, perhaps buying or beating out rivals such as Schlumberger and Halliburton, to the point that it will be difficult for surviving national oil companies in the region such as Pemex, Petrobras, Petroecuador, and Ecopetrol (among others) to function unless they partner with Chinese firms, receive investment funds from Chinese banks, and employ PRC-based petroleum service companies.”
Ellis said that it is likely that Chinese companies will emerge with substantial control over Venezuela—Guyana’s neighbour—44 oilfields, and that by 2050, “the PRC’s long game in Venezuela will have paid off through a strong position in a functional government dependent on the PRC.”
Ellis said too that as already seen in Ecuador and elsewhere, “The Chinese style of managing its petroleum operations—cutting corners regarding salaries, employee and community benefits, and work conditions—will obligate Latin American governments to repress protests in the service of Chinese oil and petroleum service companies.
“These companies will control important parts of petroleum exports, jobs, and access to credit for the countries of the region tied to oil production.”