Guyana is taking the world by storm since discovering offshore oil and gas reserves in 2015.
Amid multiple global crises, Guyanese president Irfaan Ali’s first visit to Washington last month unveiled the unique opportunity for the United States to advance its strategic and commercial interests in Guyana and the wider Caribbean.
Guyana is taking the world by storm since discovering offshore oil and gas reserves in 2015. The English-speaking Caribbean country located at the tip of South America has since seen new discoveries occur at a breakneck pace, putting estimated reserves north of 11 billion barrels. The country is on track for 1 million barrels per day by 2027, which will put Guyana among the top producers in the region and a world leader in reserves per capita.
But while Guyana is quickly emerging as a regional hydrocarbon power, its leaders are already envisioning a future beyond oil and gas. This is reflected in an ambitious plan to transform Guyana’s energy matrix over the next decade, using oil, natural gas, and a mixture of renewables. Guyana is aware of the pitfalls of being solely dependent on fossil fuels and is cognizant that there is a limited shelf life for hydrocarbons as countries transition to renewables over the next two decades.
As a result, Guyana could emerge as a model for navigating the dual energy nexus—the need to guarantee energy security now while laying the groundwork for the energy transition. The country occupies a unique and privileged position, mostly devoid of counterproductive zero-sum debates over hydrocarbon production. The country’s leaders are pro-development, understanding that oil and gas provide both short-term energy security and the capital Guyana needs to invest in renewable energy. The challenge is that despite surging oil revenue, external financial, technical, and political support is needed to reach its ambitious goals. This is where the United States, a strong Guyanese ally, can play a key role.
Guyana’s Potential for Energy Security and Transition
Russia’s invasion of Ukraine is abruptly changing global thinking about the future of energy supplies. In the West, ambitious and idealistic climate goals have run up against the hard geopolitical reality of a hostile power weaponizing its energy resources. Global leaders are quickly coming to terms with the need to prioritize energy security as the basis for a politically and economically sustainable energy transition. In this context, Guyana’s large and growing oil and gas reserves take on both national and global relevance.
Despite its offshore oil and gas reserves, Guyana still relies almost entirely on imported fuel to generate power for households and firms. Against this backdrop, Guyana has launched an ambitious gas-to-shore plan to sharply reduce electricity costs while transitioning steadily towards a cleaner energy matrix. The flagship project envisions a 220km underwater pipeline and the construction of a 300MW power plant to generate electricity from natural gas in the offshore Stabroek block. The project can reduce electricity prices by almost 50 percent and cut carbon emissions in half.
Wazim Mowla is the assistant director of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center
Theodore Kahn is Senior Analyst in Control Risks’ Global Risk Analysis practice.
Image: Reuters.
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