Guyana’s economic miracle – DW – 05/03/2024

Some call Guyana The Dubai of South America, others speak of the South American economic miracle. Guyana can expect economic growth of up to 25.4 percent this year, thus leading economic growth in Latin America. At least the UN Here’s what a recent report from the Department of Economic and Social Affairs says.

This arouses interest, especially from her neighbor. VenezuelaWho wants to annex the region Essequibo, rich in oil and raw materials. Nicolás Maduro’s socialist government has already released new maps showing the wider Venezuela, including the aforementioned region.

A rapidly growing oil industry

The main reason for the economic boom in Guyana is the rapid growth of the oil and gas sector. William Clavijo, an analyst at the University of Rio de Janeiro, recently said that Guyana’s trajectory is the exact opposite of Venezuela’s.

Venezuela’s state oil company PDVSA has suffered a steady decline over the past two decades. Experts have been replaced by loyal staff with the “right” party credentials, but not the necessary skills.

Oil companies operating in Guyana have qualified workers with knowledge and experience in the field. Almost ten years ago, American oil giant ExxonMobil made one of the biggest oil discoveries in recent history. In the so-called Stabroek block alone, up to eleven billion barrels of oil are estimated (one barrel equals 159 liters). Since then, the country’s growth has seen only one direction: upward.

“On the one hand, Guyana wants to continue exploiting its oil reserves without the threat of international conflict. On the other hand, the Venezuelan government has used the centuries-old conflict as a political distraction. Popular support,” says Carolina Jiménez Sandoval, head of the NGO WOLA (Washington Office for Latin American Affairs) in a conversation with DW. “However, both countries should use conflict resolution mechanisms to resolve their differences peacefully,” he added.

Market condition

In addition to the political component, Guyana’s economic recovery naturally has economic consequences. Recently, geopolitical conflicts such as the Russian war against Ukraine or the Hamas attack on Israel and its repercussions in the Gaza Strip have caused turbulence in the oil market, as sanctions or changes in the oil market have reshuffled the cards. A new actor favorable to the West could also calm markets in the medium term and guarantee greater supply security.

It has already surpassed Venezuela

With a population of over 800,000, Guyana already has a higher GDP per capita than Saudi Arabia. Guyana’s oil production will increase from 380,000 barrels per day in 2023 to 640,000 barrels per day in 2024, ExxonMobil has announced. The goals are ambitious: Guyana says it wants to produce a total of 1.2 million barrels per day by 2027.

By comparison, Venezuela, the world’s richest country in oil resources, produces only 700,000 to 800,000 barrels per day and will soon overtake Guyana. According to expert estimates, Venezuela has proven reserves of nearly 300 billion barrels. But, in addition to Caracas’ disaster management errors, US sanctions are also contributing to the poor results of the Venezuelan oil industry.

The fact that Guyana already lags behind Venezuela in exports is particularly bitter for its neighbours. Guyana’s February oil exports of 621,000 barrels surpassed Venezuela’s 604,000 barrels for the first time, according to local media. Meanwhile, Guyana’s president, Irfan Ali, is quickening his pace at a major oil and gas exhibition in Georgetown: “Now is the time to produce our gas as well. We have the opportunity to market the gas until the end of the decade,” Ali declared.

(ct/er)