Oil optimism may face headwinds in Guyana

Subject

The outlook for offshore oil.

Significance

A recent offshore oil and gas find has given Guyana hope of becoming a significant oil producer. However, while this and an earlier find are encouraging and further exploration is planned, the current uncertain economic environment and fluctuating oil prices suggest that bringing these finds into production is not guaranteed.

Impacts

• Oil exploration activity may prompt a flare-up of the continuing border dispute with Venezuela.
• A major offshore oil find would have a very significant impact on Guyana's GDP of some 4 billion dollars.
• However, over-optimism could lead to borrowing against an expected future windfall, or the temptation to prioritise 'vanity' projects.