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Guyana continues to be in a favourable position as it relates to its oil and gas sector, as the country is not only benefitting from higher energy prices but also from higher levels of oil production. According to an Inter-American Development Bank (IDB) report titled ‘Headwinds facing the Post-Pandemic Recovery’, specific commodities such as oil and aluminum are projected to have relatively high prices through 2024.
But even as Guyana is considered in a financially favourable position, poverty is increasing according to a recent World Bank Report. According to the report 49 per cent of Guyanese live in poverty and 48 per cent live on less than GUY$1200 a day. The report also highlighted Guyana’s education and health are behind other Latin American and Caribbean countries.
Price of oil is expected to remain over US$80 through 2024. According to the Bank these price trends and Guyana’s higher levels of oil production, have significantly affected the profile of the country’s net trade in agricultural products and mineral fuels with the rest of the world.
The report highlighted also that Guyana has rapidly moved from being a net importer of agricultural products and mineral fuels, representing 8 percent of Gross Domestic Product (GDP) in 2018 and 2019, to being a net exporter of the same commodities, with a trade surplus of 16 percent of GDP in 2020 and 31 per cent in 2021 with the rest of the world.
Prior to oil production, Guyana’s main suppliers driving the trade deficit in these products were the Caribbean Community (CARICOM) countries.
The share of net exports to these countries increased through 2021, reaching 17 percent of GDP for net exports to North America and 14 percent of GDP to other countries.
As oil production continues ramping up, these trade surpluses are likely to continue growing, the report states.
In December 2022, President Irfaan Ali officially launched the first auction for the development of 14 oil blocks, as part of efforts to develop Guyana’s oil and gas resources. The competitive bidding round is expected to close by April 14, 2023, and new contracts will be awarded by the end of May 2023.
The oil blocks on auction are for shallow and deep-water areas. There will be a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks. Stronger qualifications and requirements are set for deep water exportation as against shallow water.
There is a participation fee of US$20,000 that will see contractors gaining access to the virtual data room and participate in the competitive bidding process.
The president noted that Guyana’s offshore basin has captivated the attention of the global oil market participants, being called the world’s fastest-growing super basin over the last four years.
Offshore Guyana is estimated to have potential resources in excess of 25 billion barrels of oil equivalent and an estimated reserve in excess of 11 billion barrels of oil equivalent.
Further, the IDB report noted that soybean prices are expected to remain around 40 per cent higher than the pre–pandemic level in the medium term.
In 2022, 366 acres of corn and 495 acres of soybeans were sowed. Over 400 tonnes of soya beans was produced at Tacama in 2022.