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Transforming Guyana, Season II, Episode IX, Guyana’s New Wealth

by guyanabusinessjournal
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Unlock the potential of Guyana’s future with us!
Join the Guyana Business Journal (GBJ) & Caribbean Policy Consortium for an enlightening session on Guyana’s Fiscal Policy in the Oil & Gas Era. This pivotal webinar is part of the acclaimed Transforming Guyana Series on Wednesday, February 14, 2024, at 10:30 AM EST.
Why Attend?
Discover: Learn about the record US$5.496bn 2024 National Budget and its implications for Guyana’s economy.
Engage: Interact with a panel of distinguished experts who will share their insights on fiscal strategies for sustainable growth.
Network: Connect with industry leaders, economists, and policymakers shaping Guyana’s economic landscape.
Meet Our Panelists:
Collin Constantine: Assistant Professor and Fellow of Economics at Girton College, Cambridge.
Thomas Singh: Senior Lecturer in Economics at the University of Guyana.
Samuel Braithwaite: Lecturer in Economics at the University of the West Indies, Mona.
Justin Ram: Former Director of Economics at the Caribbean Development Bank.
Bright Simons: Founder and President of mPedigree, Honorary Vice President at the IMANI Center for Policy and Education.
Our Expert Moderators:
Terrence Blackman, GBJ
Anthony Bryan, CPC
Don’t let this chance slip by! Secure your spot now and join the conversation shaping Guyana’s trajectory in the era of oil and gas prosperity.
You can register here and share this opportunity with your network.
We look forward to welcoming you to a transformative experience.
Be well.
trb
The GBJ & CPC Team
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How Guyana’s Oil Boom Reignited the Border Controversy With Venezuela

by guyanabusinessjournal
written by guyanabusinessjournal

In December, Guyana, a South American nation with a population of over 800,000, captured significant attention due to its neighbor, Venezuela. Nicolás Maduro, the autocratic leader of Venezuela, stirred controversy by calling for a referendum in early December 2023 to seek approval for the annexation of Essequibo, which constitutes two-thirds of Guyana’s territory. Surprisingly, Venezuelans voted in favor of this move, despite the matter having been settled by an international tribunal in 1899.

The catalyst for this heightened tension can be attributed to the discovery of oil in Guyana. Dr. Terrence Blackman, the founder and CEO of the Guyana Business Journal, pointed out, “What has happened is that it’s been exacerbated by the discovery of oil (in Guyana). This discovery has made pursuing this course of action seem more attractive to Venezuela.” Guyana’s oil discovery in 2015 catapulted it into becoming the world’s fastest-growing economy, achieving the highest real GDP growth rate in 2022 and 2023. Conversely, despite possessing the world’s largest oil reserves, Venezuela has experienced a dire economic downturn since Nicolás Maduro’s rise to power in 2013.

Valerie Marcel, director at New Producers Group, observed, “Venezuela doesn’t truly have sources of support in its ambitions to take over that territory of Guyana, whereas Guyana, it seems, has international public law on its side, as well as an alliance with the United States. So, at this stage, the fears that Guyana felt in the past are much less. It feels more confident against its larger neighbor.”

Guyana’s sudden economic growth has piqued the interest of oil experts. While the country’s remarkable GDP growth may seem impressive, critics raise concerns about its weak democratic institutions and the deep divisions in its politics along ethnic lines, which could potentially expose it to the so-called “resource curse.” Gregory Brew, an energy analyst at Eurasia Group, commented, “Guyana is at a crossroads in its history. It is about to become one of the world’s most exciting and important oil-producing countries.”

To gain a deeper understanding of Guyana’s oil economy, its ongoing conflict with Venezuela, and the implications of Guyana’s oil for the United States, please watch the video above.

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Media Advisory: Transforming Guyana Season II, Episode VIII, Guyana’s Journey to Becoming a Top Choice for Investors

by guyanabusinessjournal
written by guyanabusinessjournal

FOR IMMEDIATE RELEASE

January 12, 2024

Transforming Guyana Webinar Explores Guyana’s Journey to Becoming a Top Choice for Investors

The Guyana Business Journal (GBJ) and the Caribbean Policy Consortium recently hosted Season II, Episode VIII of their Transforming Guyana webinar series. The episode “Guyana’s Journey to Becoming a Top Choice for Investors” featured insightful discussions from industry experts.

Guyana, a nation on the cusp of transformative change, finds itself at a crossroads, with a burgeoning oil and gas sector reshaping its economic landscape. Yet, as David Lewis, Vice President of Manchester Trade Ltd. Inc., rightly points out, the future prosperity of Guyana relies on a broader perspective. To truly prepare for growth, Guyana must diversify its investment climate beyond oil and gas, creating opportunities in various sectors.

Terrence Blackman, Founder of the Guyana Business Journal, stresses the importance of partnership in engaging the diaspora and attracting investors. It is crucial to shift from a conflictual approach to one that fosters collaboration and mutual benefit.

The head of the Diaspora Unit, Rosalinda Rasul, emphasizes the need to harness skills from both within and beyond Guyana’s borders. Engaging the diaspora to fill skill gaps and energize the country is a strategic move towards sustainable development.

Joel Bhagwandin underscores the significance of addressing the skills deficit and mismatch, recognizing that Guyana’s rapid development requires a skilled workforce capable of meeting international standards.

Stacey Mollison, President/CEO of Libra Management Group, highlights the importance of engaging the younger generation and tapping into their innovation and unique perspectives.

Finally, Patricia Francis calls attention to the need for improved governance and institutional clarity to create a conducive environment for business growth.

Guyana is on the precipice of tremendous growth, with immense economic diversification and development potential. However, the journey is fraught with challenges that require cooperation, skill development, and a clear regulatory framework. The nation’s ability to overcome these obstacles will determine its success in building a resilient and prosperous future beyond oil and gas.

The Transforming Guyana webinar series provides valuable insights into the development of Guyana’s oil and gas industry, focusing on safety, sustainability, and responsible practices.

For access to the full webinar episode, please visit:

Program 

 

Speakers:

  • Rosalinda Rasul, Head of Diaspora Unit Ministry of Foreign Affairs & International Cooperation Guyana
  • Joel Bhagwandin, Director, SphereX Professional Services | Commissioner, Public Procurement Commission, Guyana
  • Stacey Mollison, President/CEO Libra Management Group
  • Patricia Francis, Chairperson of Trade Facilitation Task Force and former Executive Director ITC
  • David Lewis, Vice President, Manchester Trade Ltd. Inc. & Co-Chair, Caribbean Policy Consortium
  • Terrence Blackman, Founder, Guyana Business Journal

 

Quotations:

 David Lewis, Vice President, Manchester Trade Ltd. Inc. & Co-Chair, Caribbean Policy Consortium

  • “We need to start looking at the investment climate and economy in Guyana, to a certain degree, beyond oil and gas…and the fact of really preparing the country for growth in a variety of sectors.”
  • “The problem with setting up business and setting up financing and bank accounts in Guyana remains extraordinary. We are beginning to see it as a disincentive, particularly for small companies and for the Diaspora coming in trying to set that up as a key requirement to be a bonafide business there.”
  • “This is work in progress. You’re building a brand-new country, from where it was before.”

 Terrence Blackman, Founder, Guyana Business Journal

  • “Many observers can find places for criticism, but if you take this view of what’s happening in Guyana in the broad sense, these macroeconomic fundamentals seem to be in place to make it a very attractive destination.”
  • “We are often – in our approach to this business of Diaspora engagement, the business of investor relations with Guyana – prone to a kind of conflictual relationship. If we aim for partnership, then this is not an unreasonable way to pursue this.”

 Rosalinda Rasul, Head of Diaspora Unit Ministry of Foreign Affairs & International Cooperation Guyana

  • “When you talk about Guyana having a very small population and then it’s taking off at a massive growth rate, you will need a lot of skills. We can choose to run after projects or initiatives that is not exactly what would have a great impact on the country, or we can choose to engage the Diaspora in a way that will really help to reenergize the country and take it where it needs to go.”
  • “In 2023, we started a conversation at the national level with private sector and public sector stakeholders on the shortages of skills in the country…that ended with the commitment to form a manpower unit which will be managed by the Ministry of Labor that will look into the shortages and labor needs of the country.”
  • “All of these companies are coming to the [Diaspora] Unit basically to say that ‘We have positions. There are some that we can’t find the skills in Guyana, we would like to utilize the services of the Unit to reach into the global Diaspora.’”

 Joel Bhagwandin, Director, SphereX Professional Services | Commissioner, Public Procurement Commission, Guyana

  • “International investors are always concerned primarily with political risks in the market in which they are contemplating to invest. Now, we are not only looking at geopolitical risk at a domestic level, but broad geopolitical developments.”
  • “Our development journey that is being ramped up, that is being accelerated at a very rapid pace today, it started three decades ago. It started at a time where we had tremendous economic and political challenges. There was a time when we were a bankrupt economy.”
  • “The main challenge as of now, in terms of investors and the private sector, is the skills deficit that we have, and it is a two-fold challenge. One, we have a skills deficit, a shortage of skills we need in all the sectors. Two, we have a skills mismatch, meaning that we have people actively looking for work, but of the jobs that are available, they don’t have the skills and competencies to match that.”

 Stacey Mollison, President/CEO Libra Management Group

  • “Our goal is to continue to engage people. Now we’re looking at not just the Guyanese Diaspora, but how do we continue to build and grow this. You start with awareness, you come in-country, you connect with the stakeholders and then you help those people who are serious about engagement.”
  • “It’s not just about our contemporaries, but we have to engage the young people because they bring innovation and ideas and a whole way of viewing coming into Guyana as second generation…I don’t think we do a good enough job of engaging the Millennial and Gen X population.”

 Patricia Francis, Chairperson of Trade Facilitation Task Force and former Executive Director ITC

  • “The IMF has just come out with their report on Guyana and are indicating that they should probably have growth of about 26.6% this year…Of that, they are seeing that about 6.6% will be from the non-oil and gas domestic sector.”
  • “Guyana has not really been doing very well when you look at the indicators by the World Bank, looking at the business environment. There seem to be still confusion with respect to multiple ministries that are overlapping in terms of regulatory responsibilities, and investors report they receive confusing messages from various officials. Clarifying this and the whole business of building institutions is critical and important.”

Contact:

Terrence Blackman, Ph.D., Founder & CEO Guyana Business Journal terrence.blackman@guyanabusinessjournal.com

Dr. David E. Lewis, Fellow, and Co-Chair, Caribbean Policy Consortium DavidLewis@ManchesterTrade.com

 

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The Argyle Declaration and the Price of Peace with Venezuela

by guyanabusinessjournal
written by guyanabusinessjournal

The Argyle Declaration and the Price of Peace with Venezuela: Guyana’s Saving Grace may be the International Value of a Declaration and Article 2 of Guyana’s Constitution

By

Dr. Gary Best

For sixty years and counting, Venezuela has occupied Guyana’s sovereign half of Ankoko island along the Guyana -Venezuela border. This should be kept in mind as we navigate the Argyle Declaration.

Importantly, the Argyle Declaration recently forged between Guyana and Venezuela leaves much to be desired, except the saving grace of weak international recognition for declarations and the power of Article 2 of the Guyana Constitution, which protects the borders of Guyana from changes except by a national referendum.

Nowhere in the Geneva Agreement (GA) of 1966 – the international instrument that provides the steps towards solving a claim by Venezuela that the 1899 Arbitral Award is not valid – is there any mention of a territorial dispute between Guyana and Venezuela. What is mentioned in the GA is a border controversy between Guyana and Venezuela. And there is a distinct difference between these two terms which, unfortunately, are being used interchangeably by many.

The GA refers to the claim by Venezuela as a border controversy because the 1899 Arbitral Award delimiting the border between British Guiana and Venezuela is a full, final and perfect settlement. Similar to the sanctity of titles in law, a disputant would have to prove fraud to dispossess the holder of such title. That was, and still is the situation that Venezuela finds itself in. The border controversy is therefore linked to an allegation by Venezuela of fraud/collusion by and among some of the arbitrators. Of course, the doctrine that he who alleges must prove applies to Venezuela.

Importantly also, for sixty years and counting, Venezuela has not been able to provide any evidence of fraud/collusion under the various non-judicious mechanisms within the GA. Consequently, and in keeping with the GA, this matter is now before the International Court of Justice (ICJ) for final determination. And the only issue before the ICJ is the ‘validity’ of the 1899 Arbitral Award, and not any territorial dispute. Venezuela, on the other hand, for the past sixty years and counting has pressed Guyana to discuss, within the framework of the GA, a ‘territorial dispute’, which Guyana continuously rejected and never discussed. In fact, the GA does not permit any such discussions. Hence, Venezuela’s actions within its own body politic to frame this issue as a territorial dispute. Consequently, the territorial dispute, as alleged by Venezuela, is linked to its spurious claim to Guyana’s territory. This essential difference between these two terms is key to understanding any significance of the Argyle Declaration where Guyana travels on a border controversy track within the GA, while Venezuela travels on a territorial dispute track outside of the GA.

So, what did the Argyle Declaration achieve for Guyana? What did Guyana gain? The main argument, by some, seems to be ‘peace’ with Venezuela, but at what cost? Notably, President Ali went into the discussions with President Maduro after Guyana had secured key provisional measures against Venezuela from the ICJ, to wit, “… the Bolivarian Republic of Venezuela shall refrain from taking any action which would modify the situation that currently prevails in the territory in dispute, whereby the Co-operative Republic of Guyana administers and exercises control over that area”; and “Both Parties shall refrain from any action which might aggravate or extend the dispute before the Court or make it more difficult to resolve.”

Against this backdrop, the ICJ Provisional Measure 1 recognized Guyana’s sovereignty over the Essequibo territory, and the ICJ Provisional Measure 2 recognized, indirectly, Venezuela as the aggressor having regard to its actions to annex Essequibo, post its consultative referendum. Further, the ICJ Provisional Measure 2 is repeated in the Argyle Declaration as points 1, 3 & 6. And, as pointed out at the beginning of this article, Venezuela has been an aggressor state to Guyana since 1966 when it occupied the entire Ankoko island. Significantly, Provisional Measure 1 has not been repeated in the Argyle Declaration. This is a major loss for Guyana in that nowhere in the Argyle Declaration has President Maduro committed to walking back his actions that threaten to annex sovereign Essequibo.

It is also clear that President Ali did not discuss the border controversy, as promised, since nothing was presented by Venezuela during the Argyle discussions to support its claim of collusion/fraud in the Arbitral Award of 1899. However, President Ali discussed with Maduro its territorial dispute with Guyana. This is quite exceptional and contrary to all previous actions by Guyana in that it is the first time any Guyanese Head of State has held any official talks about a ‘territorial dispute’ with Venezuela, as per Point 9 of the AD. A Venezuelan position that had never received any acknowledgment from Guyana, sixty years and counting. The discussion of a ‘territorial dispute’ between Venezuela represents what Venezuela has always wanted – bilateral discussions on a territorial dispute with Guyana, outside of the GA.

So far, Guyana has gained nothing new. But it gets worse with Point 4 of the Argyle Declaration. Here, Guyana and Venezuela declared that only Guyana is committed to resolving the border controversy via the ICJ. This is not a gain for Guyana, since the controversy is already at the ICJ. However, under the second limb of Point 4 of the Argyle Declaration, Guyana and Venezuela noted Venezuela’s non recognition of the ICJ’s jurisdiction in the border controversy. Here, Venezuela is clearly saying that it will not accept the findings of the ICJ. Of course, Venezuela is quite aware that no territorial dispute with Guyana is before the ICJ. Importantly, this non recognition of the ICJ is one of the key outcomes in the recent Venezuelan referendum. Another adverse result for Guyana. Points 7&9 of the Argyle Declaration where Guyana and Venezuela declared agreement in establishing a joint commission to discuss mutually agreed matters and “implications for the territory in dispute” is averse to Guyana’s interests, since it accords with Venezuela’s pursuit of bilateral discussions over a territorial dispute with Guyana, outside of the GA.

The declaration at Point 1 of the Argyle Declaration about not using force re matters “consequential to any existing controversies” is a moot one. Firstly, only one controversy exists, and that is a border controversy. Secondly, it is before the ICJ for final outcome. Thirdly, there can be nothing consequential to this matter since it has not yet been finalized. Therefore, its inclusion is averse to Guyana and beneficial to Caricom. Cumulatively, I am of the view that Venezuela is attempting, with the help of Guyana and Caricom, to restart the non-judicious procedures of the Geneva process, which have expired due to the controversy being finalized by the ICJ.

The only possible outcome for Guyana, after a careful examination of the Argyle Declaration is a declaration by Venezuela to be ‘peaceful’ towards Guyana. But this too can be contentious. So weak is a declaration in international law that it is worth a brief examination. In that regard, it is trite law that declarations are not cited as sources of international law. Additionally, they are of no, or limited legal effect and non-binding, except for a deliberate intention by the parties for them to be so, under the doctrine of aequo et bono. So, who else benefited from the Argyle Declaration, besides Venezuela? The answer is Caricom. From all appearances, it appears that Caricom set the ground rules and brokered an agreement to remain in the good books of President Maduro at the expense of Guyana. Debt cancellation, promises of debt restructuring and joint economic ventures ruled the roost. A legitimate question that arises is whether the government of Guyana left the door open or was it opened it before?

Another legitimate question that arises is whether President Ali had a national mandate to go so far as to discuss and include ‘territorial dispute’ in the Argyle Declaration? Put differently, did President Ali in accordance with Guyana parliamentary approval to only discuss a border controversy, needed to check back with the citizens of Guyana before committing to a declaration that includes the words ‘territorial dispute’? Did he therefore exceed his authority?

The Argyle Declaration, for the above reasons, falls outside the Geneva Agreement which has led to the ICJ, and before it which stands Guyana and Venezuela. This declaration is a standalone and of much lesser value in international law. Though Guyana may have placed itself on a slippery slope, its saving grace may well be the low international law value given to declarations and the power of Article 2 of the Guyana Constitution to preserve the boundaries of Guyana.

 

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Emerging from the Shadow of Charandass

by guyanabusinessjournal
written by guyanabusinessjournal

Emerging from the Shadow of Charandass

by

Dr. Terrence Blackman

As we look towards the future this weekend, the GBJ explores the prospects for Guyana in 2024. Reflecting on the bustling Christmas season in Guyana, a time that traditionally serves as a significant economic stimulus globally, the GBJ recalls a 2018 visit to the vibrant streets of Guyana during the festive period. The atmosphere was electric, with Regent Street teeming with activity, from Albert Street to Orange Walk, showcasing a bustling mix of cultures and businesses. This lively scene underlines the evolving socio-economic landscape of Guyana.

This vibrancy is mirrored in the broader economic context, particularly as Guyana’s oil future continues to shape its economic and social dynamics. The influx of international business interest, spurred by the oil industry, has introduced both opportunities and challenges. Small business owners express optimism and uncertainty while navigating the new economic terrain. The GBJ’s interactions highlight the diverse impacts of this shift – from a taxi driver finding new prosperity driving for oil company employees to concerns about adequate investment in essential infrastructure like education and healthcare.

The political landscape in Guyana has undergone significant transformations as well. The fall of the APNU/AFC coalition government in late 2018, precipitated by a no-confidence vote, marked a pivotal moment in Guyanese politics. This event highlighted the deep-seated ethnic and racial tensions within the country, tensions that trace back to the colonial era and continue to influence contemporary politics.

Looking ahead, the challenge for Guyana lies in transcending these ethnic divisions and finding a political arrangement that adequately represents its diverse population. The notion of a Government of National Unity, once considered by leaders like Dr. Cheddi Jagan and President Linden Forbes Sampson Burnham, resurfaces as a potential path towards a more inclusive and stable political environment.

As we step into 2024, the opportunities presented by the emerging oil economy and the need for national stability are more crucial than ever as Guyana faces emerging threats to its territorial integrity from its neighbor Venezuela. The GBJ advocates for bold, inclusive political action that can steer Guyana towards security, robust economic growth, and social cohesion. In this spirit, we extend our wishes for a peaceful, productive, and prosperous 2024 to all Guyanese and their families.

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David Rutley, the British minister responsible for the Americas and the Caribbean, is set to become the first G7 minister to visit Guyana

by guyanabusinessjournal
written by guyanabusinessjournal

A UK minister will emphasize the British Government’s support for Guyana during his upcoming meeting with the country’s president. This meeting takes place amidst an ongoing and contentious dispute with Venezuela over a vast border region that is rich in oil and minerals.

David Rutley, the British minister responsible for the Americas and the Caribbean, is set to become the first G7 minister to visit Guyana since tensions escalated following a Venezuelan referendum concerning the Essequibo region.

During his visit, Mr. Rutley will hold discussions with Guyanese President Irfaan Ali and engage with senior government and military officials.

Notably, Guyana and Venezuela, led by President Nicolas Maduro, recently agreed to abstain from using threats or force against each other in this matter.

The longstanding border issue, which spans over a century, has raised concerns about the potential for military conflict. Venezuela asserts that the Essequibo region was part of its territory during the Spanish colonial period and contends that a 1966 Geneva agreement with Britain and the then-British Guiana (now Guyana) invalidated a border established in 1899 by international arbitrators.

Mr. Rutley stated, “I am in Guyana, a fellow Commonwealth member, to express the UK’s unwavering support for our Guyanese friends. The border dispute has been resolved for over 120 years, and the sovereignty of borders must be respected anywhere in the world.”

He further welcomed Venezuela’s recent commitment, made in St. Vincent, to refrain from using force and escalating the situation. Mr. Rutley affirmed that the UK would continue to collaborate with regional partners and international organizations to ensure the territorial integrity of Guyana is upheld.

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Exploring Guyana’s Game-Changing Gas to Energy Project

by guyanabusinessjournal
written by guyanabusinessjournal

Gas to Energy Project – the most transformational project in Guyana’s history

By Cristina Caus

December 18, 2023

 

The Gas-to-Energy project is an embodiment of Guyana’s mission to transform its historically underperforming economy, now one of the fastest growing, into a world-class and competitive environment. The GtE project represents one of the largest single-expenditure projects in the history of Guyana.

Planned as a 25-year joint venture between the Government of Guyana and ExxonMobil with a cost of approximately US$ 2 billion, the project is designed to supply natural gas from the Stabroek Block through a 12-inch diameter pipeline that will run 220km to the onshore Wales Development Zone on the West Bank of Demerara, connecting to a facility that is slated to encompass a 300 MW natural gas power plant and a natural gas liquids (NGL) plant. When completed, these two facilities will be capable of producing at least 4,000 barrels per day, including the fractionation of liquefied petroleum gas (LPG). The NGL processing plant will treat the gas to extract NGLs for commercial use, and the power plant will use the dry gas to generate electricity for domestic use. Later developments could include plants for producing ammonia and urea.

The Project is one of a kind and it consists of two phases:1.Pipeline installation coming at an estimated cost of US$1.3 billion. Exxon is going to manage the installation of the subsea pipeline on the seafloor to transport the natural gas from the Liza field to the onshore pipeline, with a minimum of 50 million standard cubic feet of gas per day capacity (mmscfd) and a maximum capacity of 130 mmscfd. and 2.The construction of the gas power plant and the integrated NGL plant, managed by the US-based partnership CH4/Lindsayca at a cost of approximately US$759 million. The project is expected to come online by the end of 2024.

In its anticipation, the Petroleum Management Programme under the Ministry of Natural Resource of Guyana, released the Gas Monetization Strategy which serves as a discussion paper for citizens and experts to share their opinions with the government on the project and the strategy to manage Guyana’s substantial gas resources.

Given the size, scope and cost of the project, some are skeptical and find it difficult to determine the feasibility of it; and there are aspects that need to be analyzed.

Is Guyana truly ready for a project of this scale?

Resource wise – yes. The Guyana-Suriname basin is known to contain large amounts of natural and associated gas as well as crude oil. Gas accounts for about 25% of the 11bn barrels of oil equivalent (boe) in recoverable reserves discovered at Stabroek. According to estimates, the proved gas reserves are at 17 trillion cubic feet (tcf). , The associated gas is currently used for pressure maintenance and enhanced oil recovery, but it is considered to be trapping a substantial quantity of oil, therefore limiting the oil exploration and production capabilities as well.

Infrastructure-wise Guyana hasn’t been ready for this sudden oil and gas turn of events to start with. The country was in a similar dilemma a few years ago when it started offshore operations. It didn’t have the adequate infrastructure, financial and workforce capability to embrace this sprouting industry and that’s where a leap of faith was required. Up to date, ExxonMobil and its contractors spent more than US$900 million with locals since the first discovery in 2015. By the end of 2022, the company and contractors employed over 5,000 Guyanese workers, representing more than 65 percent of the overall workforce in the local oil and gas industry.

With no experience or offshore infrastructure, Guyana just in four years managed to have acquired two FPSOs (at an approximate cost of about $1B each) actively operating in its deep waters, with one more expected to be delivered by the end of 2023 and three more targeted by the end of 2027. That’s a total of six floating production storage and offloading vessels, quite an impressive portfolio of assets for a beginner like Guyana, and a solid investment for a supermajor like Exxon. This agile responsiveness to its petroleum infrastructure and workforce needs integrated with foreign partnerships, investments and skills transfer is a harbinger of how Guyana can manage complex infrastructure projects, such as the Gas to Energy one and how competitive it can get on the global market.

The costly infrastructure investments if coupled with the right maintenance practices have a quite long lifespan, between 30-50 years for the Gas power plants and the NGL plants and an average of 50 years for the natural gas transmission pipelines; long enough to pay off the hundreds of millions of dollars it takes to build them and longer in comparison for example with the solar power plants that on average would last 25-30 years, wind farms that have an expected lifetime of around 20 years, while energy storage last roughly 10 years.

Financially wise – yes, but this requires caution. In the past two years the global events have been favoring the commodity prices therefore creating more oil revenues for the oil producing economies, including Guyana, who has pocketed about US$1.24 billion in revenue from oil sales and royalties annually since first oil production in 2019.

The key to economic stability for a country is a balanced wealth management and distribution strategy. Often happens that developing countries who get blessed with wealth from resources initiate generous spendings, expensive projects and acquisitions which mostly lead to exaggerated loans and burdening debts. That’s the case of many oil exporters, eight out the top 35 net oil exporters from 1979 to 2010 have defaulted on their debt during that period, some of them are Argentina, Sudan, Iran, Iraq, Russia, Mexico, Egypt.

While considering a project of this scale, it is important to pay attention to maintaining a good-debt-to GDP ratio. The relationship between abundant fossil fuel reserves and rising debt is no coincidence and many of the countries facing debt distress have significant oil and gas reserves. Many oil exporting economies get trapped in this vicious cycle where they benefit from increasing oil revenues which increases the value of their reserves and boosts their credit ratings, enabling them to get more loans, when the oil prices drop the debt is heavier pushing the economy to expand the fossil fuel sector more and rely more on the revenues it generates, which gets attractive for creditors but becomes a heavy burden for the economy, as it gets more indebted. As a rule of thumb, a good-debt-to- GDP ratio is usually under 60 percent. Guyana was at 27.80 percent in 2022, expected to reach 30.00 percent of GDP by the end of 2023. According to the IEEFA Guyana’s debt will skyrocket from US$621 million in 2023 to an overwhelming US$1.7 billion in 2027, primarily fueled by the Gas-to-Energy initiative. On the other hand, Guyana’s GDP is forecasted to see a tremendous growth as well, reaching US$ 29.94 billion by 2028, placing it somewhere in the 58% debt to GDP ratio.

The Oil & Gas Debt

Vicious Cycle

Figure: The relationship between abundant fossil fuel reserves and rising debt

If we are to do a quick math around the Gas to Energy project, the pipeline installation by Exxon will commit Guyana to pay annually for the next 20 years a fixed rate of US$55 million to Exxon, this amount is the amortized cost of US$1 billion for 20 years at a discount rate. The natural gas and the LNG plant facilities are to be financed by the government, for 2023 about $US 200 million were allocated from the budget while the other portion of approximately US$646 million is pending financial approval the government is seeking from EXIM.

The flip side of the coin is that currently about 90 percent of Guyana’s power generation capacity comes from heavy fuel oil. The GtE project would be saving about US $11 million that is used to pay for fuel every single month in addition to reducing electricity prices by an estimated 50 percent, which currently is at a rate of 15 US cents per kilowatt hour. Also, according to the Winston Brassington, Head of the Gas-to-Energy Task Force, it is estimated that the commercialization of the excess NGLs will earn Guyana about US$100 million per year, providing the revenues to meet the annual payments and make a profit.

We should also consider the potential revenues from branching out the GtE project as highlighted in the Gas Monetization Strategy. The production of fertilizers, such as ammonia, can contribute enormously to the diversification of the project and the economy. Natural gas is the primary feedstock for ammonia, the building block for all nitrogen fertilizers, and accounts for 70-90% of production costs. If we take a look at the fertilizer market, it is roughly increasing by 12 percent compared to the previous years and it is forecasted to surpass US$ 240 billion by 2030. Trinidad and Tobago can serve as a good example of how profitable it can become, as in 2021, T&T exported US$1.74 billion in ammonia, the most exported product in the country and placed the nation as the second largest exporter of ammonia in the world. The Russia- Ukraine war has destabilized the fertilizer market globally, as they both were large fertilizer producers, therefore creating an opportunity for newcomers as Guyana.

There has been constant discouragement addressed by some global organizations and individuals towards Guyanese pursuit of its fossil fuels resources from the beginning. The kind of” in the right place at the right time” opportunity isn’t presented every day and wouldn’t Guyana have taken the risk to invest in its oil exploration and production it would not become the fastest growing economy in the world in few years only blessing its citizens with a phenomenal GDP per capita growth from about US$6.950 in 2020 to $US 20.000 in 2022 with a forecasted 80.74 percent continuous increase to about US $37.000 by 2028.

Some are worried that this project will indebt the country for many years to come and some even claim, as the U.S. based Institute for Energy Economics and Financial Analysis (IEEFA), that the project is “unnecessary and financially unsustainable”,  advising that Guyana could use its oil profits for a reliable, low-cost rooftop solar solution that would save billions while providing low-carbon electricity to the entire country.

Renewable energy is indeed a good solution developed in parallel, however it is an intermittent variable power and it needs to be balanced with a stable and reliable source, such as the natural gas, which is a low-carbon energy source compared to current HFO being used. Moreover, renewable energy, as solar suggested by the IEEFA, would address a portion of country’s economic challenge, which is energy generation, however, would not create the other economic opportunities as some described earlier.

The massive economic growth in Guyana is creating a huge demand for energy supply and for serious investments in grid modernization, transmission lines and substations for integration. Nevertheless, the fact that Guyana has natural gas in abundance should be considered as a step towards diversification of its energy portfolio and energy security and transition plans, while combined with renewable energy projects. A healthy approach is required that considers economic expansion into new sectors, development of new projects, reliable partnerships and investments that align with country’s needs and global market demand in a sustainable and financially sound way.

Cristina Caus is an International Economist and Oil and Gas/Energy Consultant and Business Developer. She has a rich, over a decade experience in the oil & gas industry worldwide and holds a master’s degree in international business from FIU.

 

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IMF Executive Board Concludes 2023 Article IV Consultation with Guyana

by guyanabusinessjournal
written by guyanabusinessjournal

IMF Executive Board 2023 Article IV Consultation with Guyana

December 4, 2023

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Guyana and considered and endorsed the staff appraisal without a meeting.

The Guyanese economy has tripled in size since the start of oil extraction (end-2019), from one of the lowest GDP per capita in Latin America and the Caribbean in the early nineties. Oil production is ramping up rapidly, supporting the highest real GDP growth in the world in 2022 (62.3 percent). With the help of oil revenues, first transferred to the budget in 2022, the government has started investing heavily to address large development needs. Fundamentals remain strong and there are no signs of inflationary pressures or overheating as of yet.

Guyana’s oil reserves per capita are one of the highest in the world. Going forward, oil production will continue to expand rapidly as four new fields will come on stream by end-2028. Sustained real non-oil GDP growth is also expected, as the government continues to invest in human capital, lower energy costs, and build infrastructure, including for climate change adaptation. Real GDP is expected to continue to grow extremely fast in 2023 (38.4 percent) and on average of 20 percent per year during 2024-28.

Gross international reserves are expected to continue to accumulate and reserves coverage to strengthen. Substantial savings will accumulate in the Natural Resource Fund (NRF) in the medium-term. Annual transfers from the NRF to the budget according to the NRF Act will finance most of the increase in public capital spending to meet developmental needs.

These very favorable prospects are accompanied by balanced risks. On the upside, further oil discoveries would continue to improve Guyana’s long-term economic prospects and a construction boom would support higher short-term growth than projected. The main downside risks are overheating, leading to inflationary pressures and appreciation of the real exchange rate beyond the level implied by a balanced expansion of the economy. Other downside risks include highly volatile commodity prices and adverse climate shocks as well as governance concerns, which could negatively impact the economy.

Executive Board Assessment[2]

 

In concluding the 2023 Article IV consultation with Guyana, Executive Directors endorsed staff’s appraisal, as follows:

The Guyanese economy continues to experience record growth, supported by the government’s modernization plans and unparalleled oil and gas sector expansion. Guyana’s external position at end-2022 is assessed to be moderately stronger than the level implied by fundamentals and desired policies.Guyana’s debt-sustainability analysis (DSA) indicates that the risk of (overall and external) debt distress remains moderate, with debt dynamics improving significantly with incoming oil revenues.Overall real GDP growth is projected to grow 38.4 percent in 2023 and on average of 20 percent per year during 2024-28. Guyana’s very favorable medium-term growth prospects are accompanied by upside risks—key among them being further oil discoveries that would continue to improve growth prospects—and downside risks—inflationary pressures and the appreciation of the real exchange rate beyond the level implied by a balanced expansion of the economy. Adverse climate shocks, and volatile or lower than projected commodity prices, may also negatively impact the economy. The key challenges are managing large resource revenue inflows to ensure macro-economic stability and sustainability, while investing steadily in people, physical infrastructure, and institutions.

Given the medium-term risks of inflationary pressures and real exchange rate appreciation beyond the level implied by a balanced expansion of the economy, staff recommend a continued focus on maintaining macroeconomic stability through an appropriate policy mix. Staff assess the 2023 policy mix to be appropriate, with fiscal policy increasing public investment to address the large development needs, and broad money growing in line with non-oil GDP. Staff welcome maintaining debt sustainability and a balanced growth path through moderating fiscal impulses over the medium-term, while continuing to address development needs.

The authorities’ commitment to fiscal discipline is welcome and allows for a balanced growth path, with moderating fiscal impulses projected to achieve a zero overall fiscal balance by 2028. Gross international reserves and substantial saving in the National Resource Fund are expected to continue to accumulate in the medium-term.

Staff recommend adopting over the medium-term a comprehensive medium-term fiscal framework (MTFF). As a fiscal anchor, staff recommend setting a path for the non-oil primary balance (as a percent of non-oil GDP) consistent with the ceilings the withdrawals from the NRF of oil revenues which aim to ensure inter-generational equity. The MTFF should encompass further modernizing the public financial management framework, to contain a clear medium-term fiscal anchor, a transition path, and an operational target. Staff recommend periodic expenditure reviews to ensure macroeconomic stability and preserve competitiveness by setting the pace of public investment to take into account absorption and institutional capacity constraints of the economy.

Staff recommend continuing close monitoring of macroeconomic and financial indicators, tightening monetary policy stance, and using macroprudential tools as needed. In the medium term, staff recommends a review of the exchange rate framework to ensure that it best serves the economy.

Staff support the authorities’ efforts to maintain financial stability and recommend completing the implementation of the 2016 FSAP recommendations. Staff welcome BoG’s asset quality reviews, the progress in conducting stress tests exercises, and the authorities’ strategies to promote financial inclusion. Staff strongly support the authorities’ commitment to complete the implementation of the 2016 FSAP recommendations, including closely monitoring sectoral lending exposures, related party lending, banks’ ownership structure and increasing competition in the banking sector.

Staff commend the authorities’ progress in strengthening AML/CFT, governance, anti-corruption frameworks and support further advances in their effective implementation.

Staff commend the authorities’ progress to strengthen the management of oil wealth and its fiscal transparency and recommend addressing remaining gaps. In particular it is important to implement the recommendations of the 2019 Extractive Industries Transparency Initiative (EITI) reports, including in moving towards electronic disclosure and adequate follow-up.

Staff welcome the authorities’ climate efforts implemented through LCDS 2030, which maintains forest coverage and preserves sequestration rates, and aims to enhance nature conservation, by including biodiversity conservation, watershed management, and the ocean economy, and receive payments for these efforts.

https://www.imf.org/en/News/Articles/2023/12/01/pr23417-guyana-imf-exec-board-concludes-2023-art-iv-consult

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WRINKLES IN THE PETROVERSE

by guyanabusinessjournal
written by guyanabusinessjournal

 

WRINKLES IN THE PETROVERSE

by

Dr. Tulsi Dyal Singh

 

The Petroverse is showing wrinkles

crow’s feet around its eyes

furrows on its forehead

and fine lines on its face

that no amount of cosmetology

can hide from revelation.

 

And what happens in the Petroverse

echoes exponentially in Guyana

as it learns to tame the ropes

that pull from varying directions

at the idiosyncrasies of a market

that is always unpredictable.

 

A Major Shakeup in the Ownership

The landscape of Guyana’s nascent petroleum industry was significantly altered in October 2023 when Chevron Corp announced its intended purchase of Hess Corporation. Earlier in the month, it was altered too, though less directly, when ExxonMobil announced its acquisition of Pioneer Natural Resources. ExxonMobil and Hess together own 75 percent of the triumvirate which owns the mineral rights to Guyana’s Stabroek block. The Chinese company CNOOC owns the other 25 percent. ExxonMobil owns 45 percent and is the operator of the Stabroek Block.

 

These ownership changes point to changes in the priorities that buyers and sellers constantly monitor and respond to in the ongoing business of enhancing shareholder value and returns, in a fast moving and often unpredictable Petroverse. While Guyana is the sovereign owner of the Stabroek block,

the real decision makers are the major international oil corporations that have acquired the mineral rights, have the financial resources and the technical and technological expertise to bring the oil and gas to the surface, ready for monetization. Guyana is mostly a bystander while it receives its two percent royalty and guaranteed 12.5 percent profit share until the corporate investors have recovered their capital outlays.

 

John Hess, the Chief Executive Officer of Hess Corporation was the most vocal cheerleader of Guyana’s oil, as he promoted: the promises of Guyana’s bountiful oil reserves; the advantaged exploitation agreement they had obtained; the pliability of their counterparts in Guyana; the ease of securing environmental passes; contracting with deep water drillers at the bottom of a low-cost cycle; crunchy, porous rocks laden with high quality Brent oil; and one of the lowest breakeven costs in the oil industry. Hess’ stock price reached its highest point ever as the corporation’s profit soared. So, why did he sell, at this time, to Chevron?

 

Significance of the Sale

The sale of Hess to Chevron involves much more than its Guyana’s assets but several industry observers have cited its stake in Guyana’s Stabroek Block as the crown jewel of its treasury. While the high price and the healthy premium over that price are obvious factors to motivate a sale, are there other factors that could have loaded the dice?

 

Financial Demands of Carbon Capture, Removal and Storage

 

Fossil fuels have brought incalculable benefits to mankind in the last two centuries as they powered the machinery and technologies that shape our lives today. But their production and consumption also generated petro-toxins, the most damaging of which has been carbon dioxide in the atmosphere. It is now generally accepted, even by the major oil corporations which initially denied its deleterious effect on the environment, that carbon dioxide is in fact, a major cause of climate change; and that drastically reducing carbon dioxide in the atmosphere is an environmental, moral and existential priority.

That daunting task will require: reductions in the production and consumption of fossil fuels; accelerated development and utilization of alternative renewable sources of energy; capture of carbon dioxide at the sources of generation; active removal from the atmosphere; and long term storage of the captured and removed carbon dioxide underground, undersea, in seaweed farms or conversion into nontoxic or even better, into beneficial agents. This is a very expensive task and technically demanding.

In the Petroverse of the 2030’s and beyond, can stand-alone oil producers compete with the deep pocketed major oil companies who already have a head start and who have tight connections in Washington, DC and have access to taxpayers dollars under the guise of research, experimentation and development through tax abatements, incentives and grants? Chevron and ExxonMobil are much closer to the biggest trough than Hess! I believe that a strategic exit now, especially at the high end of the valuation graph was a formidable reason the sale.

Recoverable Reserves – ?

The exuberant announcements of increases in the recoverable reserves in the Stabroek Block, in the billions of barrels of oil equivalent, have gone silent. The last estimate was 11 billion barrels of oil equivalent, and it was made more than a year and a half ago, even though eight new finds have been revealed without any change in the estimated recoverable reserves. Why? Have the new discoveries not added significantly to the cumulative total? Or, have the new discoveries only replenished the oil that is currently being extracted as rapidly as possible? Or were the initial estimates too high? Or, is there a new corporate policy to limit or delay publication of this information? Surely, both buyer and seller know the answer, but whatever is the answer, was that a factor in this sale?

The Unfriendly Neighbor, Venezuela

Guyana’s neighbor to the west is Venezuela, the country with the largest petroleum reserves in the world. At over 300 billion barrels of recoverable reserves, it dwarfs Guyana’s current 11 billion barrels. Venezuela has a very active, ongoing and ominous boundary dispute with Guyana, claiming about two thirds of the land area of Guyana as its territory. This boundary was settled more than a century ago but has flared up intermittently by Venezuela, sometimes with belligerence. Venezuela has called a national referendum for December 2023, in Venezuela, to justify continuing its spurious claim. The result of the referendum is a foregone conclusion and will likely have the only effect of galvanizing Venezuelan jingoism.

There is an open case related to the boundary, currently before the International Court of Justice. It has been dragging on for several years, largely because of non-cooperation from Venezuela, an indication of the weakness of its case. More concerning, is the present build up of troops along the border. Venezuela with a population of over 28 million people has a vastly superior military establishment compared to Guyana which has a population of less than one million and a basic defense force. A sustained military operation would be grossly asymmetrical.

Venezuela and the major American international oil companies have had a contentious history over the last two decades. From producing a high of 3.7 million barrels of oil per day, its production is now less than one million barrels per day, largely because of its nationalization of American oil assets and the resulting sanctions imposed on Venezuela by the United States government. The sanctions and the resulting diminution in oil revenues have devastated the Venezuelan economy to the extent that more than seven millilon Venezuelans have departed the country. But on October 18, 2023, the US government temporarily suspended the sanctions that applied to oil and gas operations in Venezuela. Both Chevron and ExxonMobil had huge footprints in Venezuela. Chevron still has, through a special deal with Petroleos de Venezuela S.A. (PDVSA), the national oil company of Venezuela. Is this temporary lifting of the sanctions a precursor of a rapprochement between the United States and Venezuela and a harbinger of Chevron increasing its activities there and ExxonMobil’s return to Venezuela? Is that reason enough to have worried Hess? And possibly provide another reason to sell when the sailing’s good.

Will Chevron honor the existing Carbon Credit Contract between Hess and Guyana?

In late 2022, Guyana got verification of 33 million tons of sellable Carbon Credits for its rainforest carbon sink. Hess Corporation contracted to purchase US$750 million worth of it over ten years. In fact, John Hess, CEO of Hess Corp flew to Georgetown for the signing of the agreement amidst unrestrained local delight, and the first purchase, worth US$187 million, was consummated. A partial payment of US$75 million was to be paid to a special account in Guyana with the remainder to be paid over the following 18 months. This initial lot of 12.5 million tons was dubbed “legacy credits” since the were earned retrospectively, for the years 2016 to 2020, and the price was US$15 per ton. It was announced that Hess would continue to purchase 2.5 million tons per year for 2021 to 2025 at US$20 per ton; 2.5 million tons per year for the years 2026 to 2030 at US$25 per ton, making for a total transaction of US$750 million. There has not been much publicity about any further sales of Carbon Credits. But the bigger question is if Chevron will honor the remainder of the Hess Corp’s commitment to buy the remainder of credits described in the purchase agreement. At his weekly press conference on October 26, 2023, Vice President Bharrat Jagdeo announced that he was aware of the question and that he asked his staff to check with Hess and was told that Chevron will honor the contract.

The Future of Fossilenes

Despite the almost universal acceptance that fossil fuels, which I have grouped as “fossilenes”, are a potent cause of deleterious climate changes, they are still the most reliable, portable, accessible, energy dense and cheapest available form of energy available to most of the world. The development of renewable forms of energy such as wind, solar, tidal and others have not matched the urgency that is required for them to replace fossilenes on the scale and speed required to significantly lower carbon dioxide in the atmosphere. Just two years ago, it appeared that there was a massive effort to accelerate a rapid transition to renewable sources of energy but the war in Ukraine quickly stymied that and since then the world has fallen back to its most reliable and easily available sources, namely oil and gas. From a prediction of declining use of oil and gas over the next thirty years, some experts are projecting a gradual increase in the demand and use of fossilenes.

A World of Fossilenes paired with Carbon Capture, Removal and Sequestration

It appears to me that the model that the major oil companies have been targeting involves continuing to produce oil and gas while capturing as much of the carbon dioxide at emitting sources; and launch into a massive campaign to remove huge amounts of carbon dioxide already in the atmosphere. This is where huge amounts of money will be required. I see both the acquisition of Hess by Chevron and the acquisition of Pioneer by ExxonMobil as the preamble of the development of the Petroverse of the future.

Guyana’s place in the Petroverse

Guyana’s contribution to the world’s petroleum output is expected to be around 1.2 million barrels per day by 2027, or just over 1 percent, a significant number especially for a new producer with such a small population. Many financial analysts, in talking about the Hess/Chevron deal have described Guyana’s Stabroek Block as the crown jewel of Hess’ treasures. Even though Hess’ share of Guyana production accounted for less than 10 percent of Hess’ revenue in 2022, the prospects from rapidly increasing production there have encouraged some analysts to give much greater weight to Guyana’s contribution to the sale price of US$53 billion. Ranges vary from a quarter to three quarters!

A Hypothetical Value of the Stabroek Block

At a quarter, the value of Hess’ share of the Stabroek Block is US$13 billion. At three quarters, the value US$40 billion. At a half, the value is around US$27 billion. It is tempting then to impute a current value of the entire Stabroek block. Since Hess owns 30 percent of the Stabroek block, a range of US$50 billion at the low end to US$150 billion at the high end can be imputed. As always, this is about oil and gas. Who can predict the Petroverse?

 

About the Contributor

 

Dr. Tulsi Dyal Singh is a Guyanese-born American. He is a Past President of the board of trustees of the Permian Basin Petroleum Museum, Library, and Hall of Fame. He has degrees in Medicine from the University of the West Indies, a Masters degree in Health Care Administration from Trinity University, Texas; and is certified as a bank director from the Southwestern Graduate School of Banking in Texas. He has lived in Midland, Texas, for more than forty years.

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THE JOINT DECLARATION OF ARGYLE FOR DIALOGUE AND PEACE BETWEEN GUYANA AND VENEZUELA

by guyanabusinessjournal
written by guyanabusinessjournal

THE JOINT DECLARATION OF ARGYLE FOR DIALOGUE AND PEACE BETWEEN GUYANA AND VENEZUELA

On Thursday, December 14, 2023, in Argyle, Saint Vincent and the Grenadines, His Excellency Irfaan Ali, President of the Co-operative Republic of Guyana and His Excellency Nicolas Maduro, President of the Bolivarian Republic of Venezuela held discussions on matters consequential to the territory in dispute between their two countries.

These discussions were facilitated by the Prime Minister of Saint Vincent and the Grenadines and Pro-Tempore President of the Community of Latin American and Caribbean States (CELAC) Dr. The Honourable Ralph E. Gonsalves, and the Prime Minister of the Commonwealth of Dominica and Chairman of the Caribbean Community (CARICOM), the Honourable Roosevelt Skerrit. Prime Ministers Gonsalves and Skerrit, together with H.E. Mr. Celso Amorim, Special Adviser and Personal Envoy of H.E. Luiz Inácio Lula da Silva, President of the Federative Republic of Brazil, acted as principal Interlocutors. Also present were Honourable Prime Ministers of the Caribbean Community, namely: the Honourable Philip Davis, Prime Minister of The Bahamas; the Honourable Mia Amor Mottley, Prime Minister of Barbados; the Honourable Dickon Mitchell, Prime Minister of Grenada; the Honourable Philip J. Pierre, Prime Minister of Saint Lucia; Honourable Terrence Drew of Saint Kitts and Nevis and Dr. The Honourable Keith Rowley, Prime Minister of the Republic of Trinidad and Tobago.

Attending as Observers on behalf of His Excellency António Guterres, Secretary-General of the United Nations were Their Excellencies Earle Courtenay Rattray, Chef de Cabinet of the Office of the Secretary-General of the United Nations, and Miroslav Jenca, Under-Secretary-General of the United Nations Department of Political and Peacebuilding Affairs. In addition, His Excellency Alvaro Leyva Durán, Minister of Foreign Affairs of the Republic of Colombia and Mr. Gerardo Torres Zelaya, Vice-Minister of Foreign Affairs of the Republic of Honduras, in his capacity as CELAC Troika, also participated.

All parties attending the meeting at Argyle, Saint Vincent and the Grenadines reiterated their commitment to Latin America and the Caribbean remaining a Zone of Peace.

Guyana and Venezuela declared as follows:

  1. Agreed that Guyana and Venezuela, directly or indirectly, will not threaten or use force against one another in any circumstances, including those consequential to any existing controversies between the two States.
  2. Agreed that any controversies between the two States will be resolved in accordance with international law, including the Geneva Agreement dated February 17, 1966.
  3. Committed to the pursuance of good neighborliness, peaceful coexistence, and the unity of Latin America and the Caribbean.
  4. Noted Guyana’s assertion that it is committed to the process and procedures of the International Court of Justice for the resolution of the border controversy. Noted Venezuela’s assertion of its lack of consent and lack of recognition of the International Court of Justice and its jurisdiction in the border controversy.
  5. Agreed to continue dialogue on any other pending matters of mutual importance to the two countries.
  6. Agreed that both States will refrain, whether by words or deeds, from escalating any conflict or disagreement arising from any controversy between them. The two States will cooperate to avoid incidents on the ground conducive to tension between them. In the event of such an incident the two States will immediately communicate with one another, the Caribbean Community (CARICOM), the Community of Latin America and the Caribbean (CELAC), and the President of Brazil to contain, reverse and prevent its recurrence.
  7. Agreed to establish immediately a joint commission of the Foreign Ministers and technical persons from the two States to address matters as mutually agreed. An update from this joint commission will be submitted to the Presidents of Guyana and Venezuela within three months.
  8. Both States agreed that Prime Minister Ralph E. Gonsalves, the Pro-Tempore President of CELAC, Prime Minister Roosevelt Skerrit, the incumbent CARICOM Chairman, and President Luiz Inacio Lula da Silva of Brazil will remain seized of the matter as Interlocutors and the UN Secretary-General, Antonio Guterres as Observer, with the ongoing concurrence of Presidents Irfaan Ali and Nicolas Maduro. For the avoidance of doubt, Prime Minister Gonsalves’ role will continue even after Saint Vincent and the Grenadines ceases to be the Pro-Tempore President of CELAC, within the framework of the CELAC Troika plus one; and Prime Minister Skerrit’s role will continue as a member of the CARICOM Bureau.
  9. Both States agreed to meet again in Brazil, within the next three months, or at another agreed time, to consider any matter with implications for the territory in dispute, including the above-mentioned update of the joint commission.
  10. We express our appreciation to Prime Ministers Gonsalves and Skerrit, to President Lula and his Personal Envoy Celso Amorim, to all other CARICOM Prime Ministers present, to the officials of the CARICOM Secretariat, to the CELAC Troika and to the Head of the CELAC PTP Secretariat in Saint Vincent and the Grenadines, His Excellency Dr. Douglas Slater, for their respective roles in making this meeting a success.
  11. We express our appreciation to the Government and people of Saint Vincent and the Grenadines for their kind facilitation and hospitality at this meeting.

Dated this 14th day of December, 2023.

 

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