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Since 2015, when the North American company ExxonMobil discovered large oil reserves in Guyana's waters, the country has experienced a wave of economic optimism. Reserves estimated at around 11 billion barrels, in addition to other finds in the region, could catapult Guyana to the status of one of the most prosperous oil nations in the world.
Guyana, a country located in the north of South America, neighboring Brazil, Venezuela and Suriname, is at the epicenter of an economic revolution driven by the discovery of vast oil reserves. With a population of approximately 800.000 inhabitants, this country of African and Indian heritage, once a Dutch and later British colony, may soon become one of the richest nations in terms of GDP per capita thanks to oil.
With GDP growth estimates of around 37% in 2023 and 45% in 2024, Guyana is poised for unprecedented economic expansion. Oil promises to radically change the face of the country, previously one of the poorest in South America.
Oil contracts and challenges
Guyana's first contract with ExxonMobil, splitting profits 50/50 and paying only 2% royalties to the country, was considered unfavorable. However, lessons learned from this initial agreement are guiding more advantageous negotiations for the country in subsequent contracts.
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To avoid “oil curse”, which affects many natural resource-rich countries with corruption and mismanagement, Guyana is being advised to create a sovereign wealth fund, following the example of countries such as Kuwait and Norway. This could help in the proper management of petroleum resources, ensuring sustainable benefits for the population.
Environmental challenges and climate change
Guyana faces global pressures related to climate change. With the world moving towards more sustainable energy sources, the country must act quickly to capitalize on its oil reserves as it transitions to cleaner energy sources.
The discovery of oil also brought geopolitical challenges, especially with Venezuela laying claim to the oil-rich Essequibo region. Guyana's economic future largely depends on how the country navigates this complex landscape and the actions of its political class.
Guyana is facing a historic opportunity for economic transformation and social through oil. However, success will depend on your ability to manage the challenges of corruption, environmental issues and geopolitical pressures. With prudent management and a long-term vision, Guyana could become an example of prosperity and sustainable development in South America.
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