Contrary to the belief by many Guyanese that the country’s citizens will suddenly become oil-rich from 2020, projections from Exxon Mobil and the general rules governing oil exploration and extraction is clearly saying otherwise.
As a matter of fact, the country would not see any real change in its finances until after 2025 – some 7 to 8 years from now.
According to a report in the Arkansas Gazette and Al Jazeera, (see here), as in the case of Guyana and five other territories, Exxon would take somewhere between 7 to 8 years to recover even half of its expected returns from its investments in Guyana and those countries; meaning that the South American country would not be seeing any real oil profits until after that time.
This is also reliant on oil price on the global market particularly between 2020 to 2025, and the cost of production per barrel of oil, which must be within a certain ratio in order for exported oil to be profitable.
Otherwise if the profit margin is too slim or the price for oil on the world market is too close to the amount it cost to produce a barrel of oil, then Guyana would gain very little or nothing at all, as Exxon cannot operate at a loss; – its investors need their money back and need to maintain operating costs at the same time.
Examples were drawn to countries like South Sudan, where its oil reserves are about ten times more than that of Guyana, and its drilling is way much cheaper; but yet, its citizens continue to live in acute poverty, while the country itself is stuck on the list of poorest nations in the world.
In view of this, repeated calls have been made for the Guyana government not to be misled by oil, and to take the oil profit gap seriously by refocusing the country’s economic security through the re-engaging of the agricultural, gold mining, timber exporting and bauxite mining sectors, – at least until the country can see any real gains from oil.
While some income should be forthcoming in the latter part of 2022 or most likely until the end of 2023, it will not be enough to address any significant part of the country’s budget – just yet.
Therefore, Guyanese would be foolhardy to believe that they would wake up to oil wealth in 2020 or even in 2021.
If anyone is in doubt, let them ask Exxon Mobile to publicly state when Guyana should be expecting its first windfall for the oil that they will be extracting and exporting in 2020.
And if they ever answer that question, it will be a pill that may be too bitter for many oil-crazy Guyanese to swallow.