As I wrote earlier this month, the future of the nascent oil and gas industry in the South American nation of Guyana is standing on shaky ground amid the ongoing controversy related to this year’s national elections. The situation only grew worse this week as U.S. Secretary of State Mike Pompeo urged Guyanese President David Granger to “step aside” and respect the results of the election that took place on March 2 and has remained unresolved for more than four months now.
At the same time, Secretary Pompeo also announced that the United States would place “visa restrictions on individuals responsible for or complicit in undermining democracy in Guyana.” It is clear that the American government believes those individuals include President Granger and members of his A Partnership for National Unity coalition that continues to rule the country despite election results that appear to indicate that the opposing People’s Progressive Party Civic (PPP/C) was the actual winner.
As reported by the Trinidad Saturday Express, former Guyanese Energy Minister Kevin Ramnarine is now warning that the nation’s oil industry an economy are at risk, especially if the U.S. follows its usual pattern of gradual escalation of sanctions. “As we have seen with Venezuela, the United States’ application of sanctions usually follows a gradual and incremental pattern. This might therefore be the first wave of sanctions. Should the US see no improvement in the situation in Guyana, the sanctions might be ramped up to include economic sanctions such as sanctions on shipping, on senior Guyanese government officials doing business with American companies and on the payments of goods and services for the oil industry,” he said.
Many billions of dollars of potential economic impact from the development of the nation’s rich offshore oil and gas assets stand at risk. Indeed, according to a new report from Rystad Energy, the delays in permitting caused by this ongoing election dispute have already cost the people of Guyana millions and lowered the net present value (NPV) of the entire development.
Rystad ran four different scenarios in its analysis, assuming further permitting delays ranging from 3 months to 24 months in duration. The firm finds that delays that have taken place to this point have already removed more than 50 million barrels of oil that could have been produced by 2030, along with a loss of $300 million. Their various scenarios show that the country will lose an additional 10 to 75 million barrels, depending on the length of…