Last week’s Blog highlighted the success of the Inaugural Global Energy Conference held in Guyana February 15-18, 2022. It examined the aspirations for sustainable development presented by President Ali and the verbal commendations, counseling and warnings by keynote speakers, the Presidents of Ghana and Suriname and Prime Minister of the new Republic of Barbados. However two topics — full coverage insurance by and renegotiation of the contract with EXXON - essential aspects of the complex conversation to which PM Motley referred, were off the table and swept under the conference carpet. It is to be expected that changes will be stimulated with sustained advocacy from civil society, the media, a wide cross section of the Guyanese private sector and respected regional and international policy makers, among whom are Government of Guyana advisors. These are essential ingredients of equity and the “inconvenient truths” for not “leaving Guyanese as tenants in their own country”.
It is clear that Guyana today is in a competitive position. IHS Markit Petroleum Economics and Policy Solutions [PEPS] ranks the country as the 10th most competitive jurisdiction for upstream oil and gas exploration & production investment out of 45 countries. Moreover with its current estimated 10 billion barrels of recoverable oil and gas, Guyana is likely to be a major international player in energy corridor with Brazil and Suriname. Among the more specific highlights of the conference that attracted attention and to which we address in this Blog are the roll out of low carbon development strategy, local content to include training, investing in the supply chain, growing the non-oil sector and accelerating access to capital for Guyana’s sustainable development within the CARICOM region.
Rolling out the Low Carbon Development Strategy
The Low Carbon Development Strategy (LCDS) released for consultation in December 2021, establishes Guyana’s commitment to a net zero emissions target by 2050 thereby adding to the urgency of getting new exploration of oil and gas underway. It places emphasis on leveraging Guyana’s “world-class forest, biodiversity, water and marine resources” to build a “low-carbon ecosystem economy” using mechanisms such as carbon-pricing. It argues that these resources have, historically, been undervalued and ignored. For example, in his presentation President Ali placed an annual value on Guyana’s forests of US $40 billion. Consequently creating a low carbon economy presents enormous and complex challenges. It means grappling with the climate change agenda with respect de-carbonizing existing sectors of the economy, business-models, lifestyles and practices. The presentations recognized that among the prerequisites of LCDS is to upgrade Guyana’s physical capital: its energy, transportation, digital, water and housing infrastructure”.
Local Content Linked to Improving Business Competitiveness and Reducing Poverty
There has been a recurring discussion on what does local content actually mean. From the discussion during the parliamentary session that approved the local content legislation and more so during the Energy Conference, the message was clear. While ensuring greater access of local workers and businesses to opportunities from the oil and gas sector will be guaranteed, attracting foreign investments is equally important. However, more implicit than explicit is the extent to which local content applies to skills and business enterprises within CARICOM. Among others, this requires unmasking more clearly the statement by President Ali at the opening session that Guyana is intricately linked in CARICOM since Guyanese prosperity is linked to the prosperity of the Region. The more fundamental aspects of local content, often neglected, is that of ensuring the emergence of the oil and gas sector is a catalyst for expanded business opportunities, and fostering a giant leap to a diversified economy and alleviating poverty.
The 2022 Budget, initiated in Parliament in January 28, 2022, was the first time that a budget was being partially supported from the National Resource Fund. It included a series of tax measures focused on improving the ease of doing business, increasing disposable incomes, easing the cost of living and supporting the vulnerable. These include Tax concessions for local content, supporting the renewal of the industrial and commercial fleet, promoting farmers markets, reducing import duties and VAT charges, increasing 'we care' cash grants to children in public schools, support for health care, reducing the cost of fuel, increasing public assistance and support to the elderly.
Investing in Human Resource Development
Presenters at the Energy Conference repeatedly referred to investment in human resource development as a critical spinoff of the potential wealth from oil and gas. Illustrations of these intentions were provided by EXXON with respect to its over 60M investment in education and Training including its partnership with the University of Guyana. EnerMech is another initiative of over $20 million invested into the training center in Berbice. It is intended to provide Guyanese with key skills and training certifications that are required to work in the offshore environment and combines training facilities, blended learning software and technology, as well as fully immersive simulators for high hazard activity learning. Then there is CGX and its JV Partner, FEC, that has invested $5 Million Canadian in the Guyana Advanced Academic Training and Research Program in Sustainable Transformation. This is intended to support the educational and innovative skills of Guyana’s future leaders in fields crucial for the development of the sustainable sectors of the Guyanese economy. Professor Suresh Narine's presentation revealed that the first five students are already studying at Trent University in Canada and additional students will be selected this year as candidates for advanced degrees with requirement for them to become lecturers and professors at the University of Guyana for a period of five years. Much more investments in education and training are needed as part of local content mission. At the same time, a much more cohesive approach is required to education and training for the sustainable future of Guyana, its role within CARICOM and as a player in the global arena. But an important statement made by Prof. Narine must be part of the equation. He said that academics need to learn that inaction isn't neutral. This also must be a consideration of governments and the corporate sector and the University of Guyana and other academic institutions whose research and think tanks will no doubt push the boundaries of enquiry and policy making on the basis empirical analysis.
The Challenges of a Growing the Non-Oil Sector
Compared with 2020, GDP growth in 2021 was 20 per cent overall, and 4 per cent for the non-oil economy. For the extractive industries, the mining and quarrying industries were estimated to have grown by 23.1 per cent, with higher output from the petroleum and other mining industries. Manufacturing grew by 23.1 per cent. There was a strong performance in the construction sector, which grew by 25.5 per cent reflecting increased emphasis on implementing the public sector investment programme, as well as increased private sector construction, reflecting improved private sector confidence and optimism regarding the economic outlook. The agriculture, forestry and fishing industries, however contracted by 2.4 per cent compared to a decline of 4.1 per cent. So did the sugar industry by 22.4. Conversely, the rice industry grew by an estimated 7.8 percent , but ‘other crops’ declined by 7.3 per cent due to the floods. Further, the livestock industry was estimated to have grown by 10.6 per cent. However, the fishing industry contracted by an estimated 6.6 per cent. It was reported that total output from the petroleum sector increased by 65.4 per cent when compared to the same period last year.
The sketches provided on the various issues raised at the Guyana Energy Conference, are exactly that. They are just part of a scenario for which deeper examination is required. Among them are evaluations of the outcomes from the goals established for LCDS, local content and the diversified non-oil economy. Most important is the access to capital, the beneficial use of the National Resource Funds, the nature of the partnerships for advancing Guyana's economic prospects and indeed how these are truly integrally linked to the CARICOM region. Perhaps the second iteration of the Guyana International Energy Conference set for February 14, 2023 will provide an opportunity for a score card highlighting levels of efficiency, growth and equity from the El Dorado Corridor.
The Inaugural Guyana International Energy Conference held at the Marriott, February 15-18, 2022 was an overwhelming success. This is based on the wealth of information, analysis and policy pronouncements on several topics including the energy transition; the health, safety and environmental culture, opportunities for members of the Diaspora, plans to ensure the transition away from heavy fossil fuels; local content in principle and practice; and updates from oil operators in Guyana’s waters. The Conference organizer reported 800 registered delegates from 25 countries, and 1,500 visitors to the Exhibition Centre and widespread sponsorship from international corporations and the local business community.
Since 2015, oil companies operating off Guyana’s coast have found more than 10 billion barrels of recoverable oil and gas, accounting for a tenth of the world's conventional discoveries. A consortium with Exxon Mobil Corp (XOM.N), Hess Corp (HES.N) and CNOOC Ltd expect to produce 1 million barrels of oil and gas per day by the end of the 2022. In addition, more oil finds projected for the Stabroek, Corentyne, Canje, Yellow Tail, Unity and Conuku blocks will enhance outputs from Guyana's oil and gas sector further.
What resonated from the opening to the closing session was that this was not an Oil & Gas conference per se. It was an event that showcased opportunities for Guyana’s sustainable development with the oil boom being the pivot for the viability of other sectors. It was indeed reminiscent of the panel presented at the University of Guyana Green Institute conference in October 2021, that identified how Guyana could be a global model of aligning oil economy with a green economy.
Highlights from the Keynote Opening Panel
The tone was set at the opening session when the President of Ghana, Nana Akufo-Addo insisted that local content development must place emphasis on the public interest, transparency and accountability; and the oil and gas sector must enhance local content in all aspects of the industry’s development. This is illustrated in Ghana’s local content law which is not about nationalization but partnering to bring benefits to its citizens who own the resources that are being developed. Hence energy sustainability must translate into social and economic benefits for the citizens as it transitions from fossil fuel to green energy.
President Chan Santokhi of Suriname stated that in utilizing the new found wealth, it is important to take into account the impact of climate change and looming global instability on the oil and gas economy which need to be developed in an environmentally friendly manner. He advocated that sustainable development must place emphasis on functional cooperation in infrastructure, environment, marketing and energy as the framework for securing the economy for future generations. The Guyana-Suriname Corridor offers a rich potential for rapid growth.
For PM Mia Motley of Barbados energy is integral to the sustainable future of CARICOM and there is need to engage in the ‘inconvenient truths’ about the perpetuation of inequities and disparities without a reparatory process. Consequently, there is need to ensure that at no stage must citizens be left as tenants in their own land. She recommended an investment of 10% of the oil and gas bonanza to finance renewable energy, education and health and pointed to Barbados’ initiatives including the establishment of green bonds and a green development bank, local ownership and entrepreneurial development. She advocated for the world to pause for the complex conversation since 'net zero does not mean zero'.
President Dr. Irfaan Ali stressed that the major aims of the exercise are situating Guyana’s energy transition in the wider development plan, building partnership and removing barriers for bringing people together and working to develop the Corentyne as a new frontier. He was emphatic that local content must include welcoming foreign investors. He highlighted that Guyana is intricately linked in CARICOM since Guyanese prosperity is intertwined with the prosperity of the Region. He presented the emergence of the oil and gas sector as a catalyst for expanded business opportunities, a giant leap to a diversified economy and an opportunity to invest in human resource development with special reference to education, health, training and the enhancement of competences for the future world of work. The President emphasized Guyana’s contribution to global solutions as exemplified by the worth of its standing forests, which has one of the best deforestation rates at less than 0.53% valued at approximately US$500B.
Platforms for Moving Forward
The keynotes from the primary speakers above provide the broad frame of reference for the take-off of the Conference which focused on the issues that by and large optimistically pointed to a bright future that is happening now. The areas that were covered by plenary sessions revolved around issues to be further explored. They include:
This month is dedicated to celebrating the achievements by African Americans. It provides an opportunity to recognize their central role in U.S. history and impact globally. The annual celebration also known as African American History Month, grew out of “Negro History Week,” the brainchild of noted historian Carter G. Woodson and other prominent African Americans. Since 1976, every U.S. president has officially designated the month of February as Black History Month. Other countries around the world, including Canada and the United Kingdom, also devote a month to celebrating Black history.
GOFAD in its exploration promoted by a question from a 10 year old boy in Guyana discovered what many may already have known but is worth sharing:
Today, Black History Month is a time to honor the contributions and legacy of African Americans across U.S. history and society—from activists and civil rights pioneers such as Harriet Tubman, Sojourner Truth, Marcus Garvey, Martin Luther King Jr., Malcolm X and Rosa Parks to leaders in industry, politics, science, culture and more.
The theme of Black History Month 2022 “Black Health and Wellness,” According to my primary source Association for the Study of Negro Life and History (ASNLH), it is intended to focus on: ”the legacy of not only Black scholars and Medical practitioners in Western medicine, but also other ways of knowing (e.g., birth workers, doulas, midwives, naturopaths, herbalists, etc.) throughout the African Diaspora. The 2022 theme considers activities, rituals and initiatives that Black communities have done to be well."
What is intriguing from the historiography is that Black people have embarked on self-determination, mutual aid and social support initiatives to build hospitals, medical and nursing schools. Among, most notable of such institutions are: Meharry Medical College, Howard University College of Medicine, Provident Hospital and Training School, Morehouse School of Medicine, etc.)
In addition, clinics were established by individuals, grassroots organizations and mutual aid societies, such as the African Union Society, National Association of Colored Women and Black Panther Party, to provide spaces for Black people to counter the economic and health disparities and discrimination that are found at mainstream institutions.
At this point in the 21st century, our understanding of Black health and wellness is broader and more nuanced than ever. Social media and podcasts, such as The Read, hosted by Crissle and Kid Fury have normalized talking about mental health and going to therapy as well as initiatives such as Therapy for Black Girls.
In the still overhanging shadow of the COVID-19 pandemic, Black people are increasingly using data and other information-sharing ways to document, decry, and agitate against inequalities intentionally baked into systems and structures in the U.S. for no other reason than to curtail, circumscribe, and destroy Black well-being in all forms and Black lives. Moreover, Black History Month provides Black communities with the opportunity to look to the past to provide the light for the future. This may mean embracing the rituals, traditions and healing traditions of the ancestors. These ways of knowing require a decolonization of thought and practice.
China and the return of the Left in Latin America
Global Times, 27 Jan 2022
The landslide election of Gabriel Boric as Chile's youngest president ever followed closely that of Xiomara Castro, Honduras´s (and Central America's) first female president. In their own way, each of these newly elected leaders reflects the powerful currents of change sweeping the region. After a hiatus of right-wing governments, the Left is also back in power in Peru and Bolivia, and, according to current polls, may elect Gustavo Petro to the presidency in Colombia in May, and Luiz Inacio Lula da Silva in Brazil in October. This represents a major change and opens new possibilities for the region's role in world affairs, as well as opportunities for its relations with China. Just as the "Pink Tide" of the 2000s was a reaction against the Washington Consensus, the current trend to oust incumbent rulers is a reaction against their incompetence in handling the twin challenges of the pandemic and the recession that hit the region in 2020.
In the nineties, observers, mesmerized by the supposed "end of history," concluded that people were, in Latin America and elsewhere, also at the end of ideology. Thus the Washington Consensus proclaimed "There is No Alternative" (TINA) to neoliberal solutions. Yet, the ostensible failure of radical market policies (most evidently in Juan Carlos Menem's Argentina, culminating in the country's sovereign default in 2000-2001), opened the doors to a different approach, with a "Pink Tide" washing across South and Central America.
Helped by the commodities boom (2003-2013), leaders like Lula in Brazil, the Kirchners in Argentina, Lagos and Bachelet in Chile, Vázquez and Mujica in Uruguay, as well as Correa in Ecuador and Morales in Bolivia, gave a new impetus to social and economic progress, however haphazardly and unevenly. They also worked together to build new regional schemes, in economic integration and in political cooperation, of which UNASUR and CELAC are the most prominent. That said, it is also true that the legacy of those years is mixed. Despite the increased inflow of foreign exchange from the export boom that took place, the region's low investment rate hardly budged, from 18 percent in the nineties to 19 percent in the 2000s, while the tertiary sector (i.e., manufacturing) shrank as a share of regional GDP, with a surge of extractive activities like mining and agriculture. The sad fate of UNASUR, which no longer exists, is also testimony to Latin America's troubles in establishing long-standing regional bodies. The telling inability to agree on a candidate for secretary-general of the organization contributed to its subsequent demise.
China's policy toward Latin America, of course, is based on the principles of state-to-state relations and non-interference in internal affairs. That said, it is important to understand how, in this new phase, China can best work with Latin American countries in fostering their growth and development. The 2000s were marked by growth in Sino-LAC trade and from 2010 onwards we saw a steady increase in Chinese FDI and finance flows, as well as a shift from investment exclusively in mining and extractive activities, towards physical and digital infrastructure, as well as energy. Although welcome, it should be complemented by incentivizing Sino-LAC joint ventures in manufacturing and adding value to the commodities which abound in the region, especially in South America. This would break new ground, and would also be in keeping with China's shift toward a service economy and away from heavy industry.
The case of lithium, the "white gold" of the new century, is emblematic in this regard. While the so-called "lithium triangle" in Argentina, Bolivia and Chile holds a significant amount of the world's lithium reserves, key to the e-mobility sector in which China leads, efforts to generate Chinese investment in the manufacturing of lithium batteries have not born fruit so far. This perpetuates a pattern in which South American countries export mostly commodities to China while importing manufactured products, accelerating the trend to what Castillo and Martins Neto have referred to as the "premature deindustrialization" of countries like Argentina, Brazil, and Chile. In Argentina, in 1950, 26 percent of the jobs were in industry, but fell to 10 percent in 2010; in Chile, they fell from 20 to 9 percent in the same period.
The new wave of progressive governments is much more aware than its predecessors of the need for industrial policies to foster development and growth. The dire predictions for the region's economic performance in 2022, when it is projected to grow a mere 3 percent, the lowest of any region, reflect not just the impact of the current crisis, but a broader failure. As the region enters a new political cycle, there is an opportunity to break out of the vicious circle of "boom and bust" that has led Latin America from one lost decade to another. In this, China and Chinese companies can and should play a significant role.
Jorge Heine is research professor at the Pardee School of Global Studies, Boston University, a Wilson Center global fellow in Washington D.C. and a non-resident senior research fellow at the Center for China and Globalization (CCG) in Beijing.
Edward and Auriol Greene Directors, GOFAD.