The discovery of oil has boosted the global profile of both countries but their governments now face challenges navigating geopolitical interests IN RECENT years both Guyana and its neighbour Suriname have emerged as significant hotspots for oil and gas exploration. The discovery of oil has raised the profile of both countries while creating new challenges since they must now navigate their way through multiple geopolitical interests. In 2015 Guyana discovered its largest offshore oil deposits with over 11 billion barrels of oil and 30 trillion cubic feet of natural gas followed by further deposits in 2017. This success was followed by Suriname in 2020 and 2022 when large reserves of 6.5 billion barrels of oil and gas were discovered off its coast.
The promise of oil
Since the discovery of oil Guyana has emerged as the world’s fastest growing economy recording consistently high growth in 2022 with a 62% GDP increase and an extra 37% in 2023. The Guyanase Government has stated that it intends to use the revenue to diversify its economy. In Suriname it is hoped that the oil discoveries will transform and diversify the economy from the mining sector which it has been heavily dependent on since the colonial period.
Additionally it is hoped that oil extraction could help Suriname out of the economic slump that it has been in since 2020 following the mismanagement of the previous President Desi Boutrese. Suriname’s economy had contracted by 16% in 2020 while inflation soared to over 51% exacerbating an already significant cost of living crisis. Both countries see the oil discoveries as the pathway towards permanent economic development.
Greenhouse gases
Some analysts have argued that both Guyana and Suriname’s oil discoveries have come too late at a time when many countries around the world are trying to cut down on producing greenhouse gases.
Under the 2015 Paris Agreement, most countries have agreed to reduce their greenhouse gases to net zero by 2050. Guyanese President Irfaan Ali agrees that time might not be on Guyana’s side even if most countries are still not on track to meet the net zero target.
But he argues that even if most countries meet the net zero target by 2050, oil and gas will still be needed for the remainder of the 21st Century as the world transitions towards green energy.
For Suriname, corruption is the biggest threat to the country fully realising its economic potential. Under former President Desi Boutrese corruption in the forms of bribes and clientelism has proliferated across many Surinamese institutions.
The threat of Venezuela
In December 2023 the Government of Venezuela held a referendum to build support to annex the Guyanese region of Essequibo. The territorial claims of Venezuela intensified in 2015 with Guyana’s discovery of oil. As a result, Venezuelan President Nicolas Maduro has deployed troops along the border with Guyana and is building an airstrip for a potential invasion.
Even though tensions have been reduced in recent months and the United States, Brazil, CARICOM and UK have threatened intervention in the advent of a Venezuelan escalation, the threat from Venezuela could have profound long-term consequences for both Guyana and Suriname.
Just the threat of war in the region could scare investors and oil companies away from both countries which would keep both countries from fully exploiting the wealth from oil. This would ultimately restrict economic growth and ultimately hinder the potential of Guyana and Suriname.
Source: voice-online.co.uk