Micah Maidenberg Profile picture
Jun 20, 2018 22 tweets 11 min read Twitter logo Read on Twitter
Guyana has come into a massive cache of offshore petroleum thanks to string of discoveries by @ExxonMobil & its partners. @manuelaandreoni and I wrote about the issues at play for @ForeignPolicy. Read on for a #Guyana and #oil thread 1/ foreignpolicy.com/2018/06/19/the…
The small South American country has never produced oil before, but now its reserves seem to keep growing. Just today, one of ExxonMobil’s partners announced another find offshore 2/
A former British colony, #Guyana is English speaking, part of the the @commonwealthsec and home to around 750K, according to the country’s '12 census. The biggest population groups are Guyanese of African descent, & those who trace their roots to India. 3/
Both communities have competed fiercely for power over the years. Check out @gbahadur’s great coverage in @ForeignPolicy of the 2015 elections in Guyana for more on this dynamic. 4/
Nine days after the 2015 elections, which brought a new coalition government led by the People’s National Congress to power, ExxonMobil announced a “significant” discovery, at the Liza-1 well, located 120 miles from the coast. 5/
Many observers long assumed Guyana had oil. In 2012, for instance, the @USGS estimated there were about 13.9 billion barrels of crude in the Guyana-Suriname Basin. No one had really found any until ExxonMobil made it happen. 6/
Before today’s news about another discovery, ExxonMobil estimated it had found about 3.2 billion barrels in Guyanese offshore waters. It’s a huge number for a place where for years, oil wealth was just a dream. Oil is expected to start flowing in 2020. 7/
You can see the offshore oil economy starting to emerge in Georgetown, the capital. At left, a shot I took of an under-construction depot on the Demerara River that’s supplying ExxonMobil. At right, oil piping is stored on another dock closer to downtown. 8/
Guyana faces big questions about how to regulate sophisticated international companies and manage millions in cash inflows into government coffers. It’s not hard to find people worried about the “resource curse” damaging the country’s prospects. 9/
A key government minister even told me and @manuelaandreoni that he is “petrified” about the curse hitting Guyana. 10/ foreignpolicy.com/2018/06/19/the…
Researchers who study the resource curse basically are asking questions about why countries endowed with valuable oil, mineral or other deposits fail to develop. Background reading: an academic considered six aspects of the curse in this 2010 paper. 11/
Another aspect of the curse is the relationship between resource money and corruption. Oil "requires permitting and things like that from the government, so it’s just incredibly tempting for the executive branch to capture those resources," one expert told us. 12/
Corruption is already an issue people in and outside Guyana worry about. Below, a photo of a sign we saw in Georgetown. With cash inflows from oil, the stakes over government, oil revenue and how money is spent will be even higher. 13/
To use money from oil to develop, Guyana will need to develop regulatory systems for the industry and figure out how to use, spend and invest future oil money. It’s still working on policies for both. Environmental regs, auditing, tax are issues too. 14/ foreignpolicy.com/2018/06/19/the…
Guyana could rake in $300M per year from the first phase of Exxon’s first well, and one Norwegian consultancy projected the country could rake in $5B per year from oil. That’s a lot of money for a country where the current budget totals about $1.2B. 15/
Still, there’s a been a wave of criticism about the contract, which gives Guyana a 2% royalty, a $1M annual fee, and a 50/50 split of the “profit oil” -- what’s left after ExxonMobil & partners recover costs 16/
ExxonMobil defended the contract to us, and does not appear eager to change things. One of the firm’s exec’s in Guyana spoke this spring about the “real value in the sanctity of a contract,” @demwaves reported 17/ demerarawaves.com/2018/03/06/exx…
Not everyone agrees. I photographed this marcher at a Georgetown May 1/Labor Day Parade 18/
Meanwhile, the contract is already helping Guyana in one respect: the gov is using a signing bonus from ExxonMobil & its partners to litigate a border dispute w/Venezuela at the @CIJ_ICJ 19/
… and Venezuela and ExxonMobil, of course, have fought for years over the late President Hugo Chavez’s expropriation of its assets. 20/
These are a few of the dynamics at play as oil production draws closer. Did I mention the next presidential election is scheduled for 2020, the same year oil is expected to start flowing? 21/
Please read the story and let us know what you think (my email’s in my bio). Thanks for taking a look. And for ongoing coverage, check out the Guyanese newspapers @stabroeknews and @demwaves. 21/ foreignpolicy.com/2018/06/19/the…

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