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Substantial oil discovery off Guyana points to need for Sovereign Wealth Fund

by Chevy Devonish

Exxon Mobile’s announcement on Wednesday of a “significant oil discovery in the Stabroek Block…approximately 120 miles offshore Guyana,” bears promising prospects for a healthy Sovereign Wealth Fund (SFW) for Guyana.

The development of a SFW received much mention by the A Partnershp for National Unity (APNU) + Alliance for Change (AFC) coalition during the 2015 Election campaigns, specifically by now-President David Granger.

While Exxon Mobil Corporation says it has discovered “more than 295 feet (90 meters) of high-quality oil-bearing sandstones reservoirs,” it noted that it is yet to determine the “economic viability,” of the find, as well as “evaluate other resource potential on the (Stabroek) Block.”

“If we found oil we would not want to spend the revenue from it today,” Granger told reporters on Wednesday. He continued that such revenue from the exploitation of oil, as well as other natural resources, would “be paid into a sovereign wealth fund so that our children would not have to live in poverty or wonder what happened to the resource of their country.”

Meanwhile, Finance Minister Winston Jordon also noted to Demerara Waves Online News that a SWF is instrumental to sustained national development as it is prudent to “think about future generations” and “saving for a rainy day.”

However, noting that commercially viable quantities of oil are yet to be discovered, he said that government first has to find the money to develop a SWF. Like the president, he pointed out that the revenue which Guyana is already receiving from the exploitation of the forestry and mining sectors can be used to get the fund going.

More than exploiting Guyana’s natural resources, Jordan emphasised the need for the “proper exploitation of natural resources.” The previous administration was often castigated for what critics perceived to be its irresponsible spending of revenue garnered from the exploitation of natural resources.

It is interesting to note that former Agriculture Minister, Dr. Leslie Ramsammy, expressed on his Facebook page that the results of Elections 2015 was engineered by international players because at least one of them wants to put its hands on a prospective oil sector in Guyana.

“Is oil now reason for rigged elections,” the former minister, who is an American citizen, noted, while opining that in the haste to produce an early result Guyana may have been gifted “with another government born out of fraud and rigging.”