Guyana
Development
A floating oil rig, similar to the ones in Guyana
Oil
In 2015, the oil company Exxon Mobil found oil off the coast of Guyana in the Stabroek Block. Exxon had held the rights to exploratory oil mining in the area since 2008, but they didn’t think that there would be any oil there. However, at the close of their agreement, they contracted out the rights to smaller companies that would pay for the exploration. Quickly it became clear that there was oil in the Stabroek Block off the coast of Guyana, and a whole lot of it. In total, there are nearly 11 billion barrels of oil in Guyana. In 2019, oil production began with the Liza Phase 1 development. This project was followed by Liza Phase 2 and Payara. Together, these developments are the only current oil mining operations in Guyana, but there are many more planned for the future. Oil in Guyana is actually much cheaper than oil from other South American countries due to its simple geography, reducing the cost of extraction. This has made oil sales very successful in the European market. Oil hasn’t been entirely smooth sailing for Guyana. Venezuela’s claims on Guyana-Essequibo threaten the production of oil. The Venezuelan government even held an election to turn Essequibo into a new Venezuelan state! They have also amassed troops along Venezuela and Guyana’s border. However, any military actions by Venezuela would likely be prevented by intervention from Brazil or the United States, both reportedly in favor of Guyana’s security.
Development
This oil boom has massively impacted Guyana’s economy. As shown in the graph, Guyana’s GDP per capita has skyrocketed from 6,000 in 2015 to 20,000 today! This effect can also be seen in Georgetown, where hotels, shopping malls, and the country’s first Starbucks have been built. All of this is wonderful for the rich upper classes, but the benefits of oil have not yet trickled down to the less privileged people. In Georgetown, one Starbucks order* may cost 10 dollars, a sixth of the average persons weekly salary! Guyana’s government have been trying to remedy this, however. The government’s yearly budget has been increased using funds from oil extraction. This money will go towards improving agriculture, roads, and the University of Guyana. Hopefully, these improvements will benefit Guyanese regardless of their social status. Another important improvement is the gas-to-energy power plant. This is a collaboration between Guyana's government and Exxon Mobil to create a Natural Gas power plant. Currently, most of Guyana’s electricity comes from unreliable in-house generators. With the power plant, thousands of Guyanese can have reliable power for much cheaper.
The Future
Today, Guyana’s expansion looks like a one way track to development and prosperity. However, this expansion may come to a screeching halt due to the so-called “resource curse.” The resource curse is that a nation very rich in natural resources will experience a sharp growth followed by a steep decline and a rise in authoritarian governments. Discovery of oil or other natural resources has often hurt other industries. This makes the economy so reliant on a resource that when a problem arises, it has nothing to fall back on. To combat the curse, countries must diversify their economies away from oil and into other sectors. Venezuela and the United Arab Emirates are two countries that have both experienced rapid growth, but with very different results (see graph). Guyana, for its part, has been making an effort to put its wealth back into the hands of the people and industries but only time will tell how its story plays out.