CERA Week 2023 Interview of Guyana Vice President Jagdeo by S&P Global Vice Chairman Daniel Yergin
17 March 2023 – Georgetown, Guyana – At the recently held annual CERAWeek Energy Conference in Houston, Texas, Vice President Dr. Bharrat Jagdeo was interviewed by S&P Global Vice Chairman and Pulitzer Prize winning author, Daniel Yergin in a session titled ‘Spotlight: Guyana’s Rise as an Energy Power'. A range of topics were addressed in the 30 minute interview, including developing resources in a ‘climate challenged’ and divided world, observations on the COP Conferences (United Nations Climate Change Conferences), the upcoming licensing round, establishment and use of the sovereign wealth fund, local content legislation and its effectiveness for building capacity.
‘Participation in CERAWeek marks a major step for Guyana in becoming a leading voice on the international stage with regards to energy and climate,’ commented TOTALTEC CEO Lars Mangal. ‘In terms of influencers and agenda, this is the most significant event in the energy world.’
Selected highlights and remarks from the interview follow, with relevant links at the end.
The Fastest Development in History
Daniel Yergin (DY): This is the fastest offshore development in history...How did it happen?
VP Bharrat Jagdeo (BJ): The find is a great... Therefore the investors see the interest there, and they want to develop these resources at an accelerated pace. And we as the government of Guyana support that vision - a fast paced development of the resources offshore, particularly in the context of Net Zero.
We believe it is a wise strategy to do as much exploration as possible now, prove the resources, and then have them removed and transferred into financial assets so that in the future it can serve to transform the country.
Encouraging Fast Development
DY: What has been the philosophy, from the side of the government, to encourage responsible, but speedy development?
BJ: It's the pace at which we license the new developments. I think they are rapid, without compromising on due diligence. We don’t have much of that technical capability. At home it is a new sector. We have to buy that capability…
And so we have been doing that to keep pace with the development that the oil sector has proposed. We have been providing a supportive regulatory environment... and I think because of that we can move rapidly.
The Reactions of People and NGOs
DY: Are people surprised to have this kind of development like this, this fast?
BJ: At home, maybe not, more so abroad. The industry had some negatives at home, because of what is taking place globally, this push to Net Zero. We have a lot of NGOs that have descended on the country, pushing to stop developing…
We are already carbon negative, where the world wants to be in 2050. Even with 10 FPSOs operating offshore we will be carbon negative. Our forests are bigger than England and Scotland combined… We have strong environmental credentials.
Economics, Society, and NGOs
DY: These NGOs and the people who criticize development, do they pay attention to the need for economic development in the country, and compare it to other places?
BJ: I think many of them are offshoots of global NGOs and there is no balance in the global debate. If you look at the last COP (United Nations Climate Conference), you had conflict between those who say …. we need new technology and those who say we need to stop producing now.
I believe that we are losing sight of the balance. We need to reduce the production of fossil fuels. We need technology, carbon capture, utilization and storage, and we need renewables.
But the debate globally is not nuanced. It is this extreme that often doesn’t care about the people…the people of Guyana have a legitimate aspiration to a better life. Our annual GDP per capita was about USD9K. By the end of this decade it will be about USD35K, but still about half that of the USA.
We have argued that people have to have a balanced view. Many of these NGOs would never have a balanced view of development. …..It’s stymieing the global debate around climate change.
We’ve been at this for a very long time. It seems that every time we meet at these bodies, we never make progress in a sustained way because people are not talking to each other.
A North-South Divide on Development
DY: It does seem there is a north-south divide on these questions….you hear the same things from Asia and Africa…
BJ: The countries that have newly discovered oil… the UN Secretary General has said it’s immoral to develop these resources. The IEA said you must not further develop any of these resources...
We are arguing that if they succeed with that happening, then effectively you are preserving a monopoly for the existing producers. Because even in a net zero scenario in 2050, you will still need large quantities of oil. So who should be the producers?
If we can’t enter the market now, then you are preserving a monopoly… And that is why at the last COP you saw a lot of developing countries pushing back.
A Principled Approach to Bidding
DY: You have had great success so far. You have a new bid round coming up… a lot of people would be interested to hear about it.
BJ: This is the first time we are doing a bid round. So we are learning. We have recruited the consultants - IHS Markit - to help us through the process…
We have put 14 properties offshore. You can bid on any, but win a maximum of 3. We want multiple companies.
We believe in stability, we believe in predictability. We don’t believe in a capricious government, but we have to have a world class regulatory environment both at the EPA and within the government.
We are working with the international groups - IHS Markit and others…are advising us to put that in place…we will build that capacity in future years, but it’s not there now. We can’t await the development of the capacity to move the industry along.
Local Content Legislation and Building Capacity
DY: In terms of development of infrastructure the physical …., and the human infrastructure in terms of training...
BJ: We believe that the industry, the companies that come to Guyana, will do extremely well. We believe we have to share this future and share this prosperity.
But that would require the companies to work with us a bit more… And so when we, for example, we were going to pass the local content law. Many of the companies were skeptical, they thought this may shut down the business.
We did it, it’s been in operation a year, the companies are doing well. And a lot of business now, a lot of opportunities have come to the locals. So that has changed the dynamics. There was not a big excitement about the industry in the local population.
But now that they are becoming integrated in it, the goodwill for the industry has skyrocketed from the early period, when they thought ‘....these guys were operating in an enclavic way, they get the oil offshore and take it away, nothing comes onshore’.
That is what we want to work with the oil majors on. To make sure that we share. That’s going to be more sustainable in the long run.
We are working with ExxonMobil and others on a huge facility for training Guyanese, we have started recruiting the skills to come and train and certify people. So the local population gets more opportunities from the sector.
We are determined to see that the benefits flow across the country. And it is a good long term strategy for the investors too. It doesn’t require more money. It just requires a bit more time and doing things differently.
CERA Week website https://ceraweek.com/index.html
Daniel Yergin interview with Vice President Jagdeo https://ceraweek.com/program/spotlight-guyanas-rise-as-an-energy-power-13694-807942/
Daniel Yergin website, ‘America’s most influential energy pundit.” The New York Times, https://www.danielyergin.com/
United Nations Climate Conference - COP 27 https://cop27.eg/#/
S&P Global Vice Chairman Daniel Yergin conducts a wide ranging interview with Guyana Vice President Bharrat Jagdeo at CERAWeek 2023 in a Spotlight session titled Guyana’s Rise as an Energy Power.
TOTALTEC is focused on the success of the energy industry in Guyana for the benefit of the country, its people, and partner companies. It does this through three areas: people, partnerships, and facilities. Qualified and motivated Guyanese develop through the TOTALTEC Academy, where more than 1,600 have been trained. Partnerships prioritize products and services that are starting points to grow from, creating new Guyanese led companies, for example Jaguar Oilfield Services. Facilities include Guyana Shore Base Inc (GYSBI, also a partnership) providing a complete range of services to onshore/offshore operations. The TOTALTEC 94% Guyanese workforce includes 6 nationalities with more than 160 years of international oilfield experience.