Guyana snaps political impasse, Payara beckons

Guyana broke a five-month political impasse with agreement to inaugurate a new government that is promising more local benefits from the country's rising oil production.

The new administration led by the People's Progressive Party (PPP) "will work to ensure that the nation's patrimony is enjoyed by and benefits all people," president-elect Irfaan Ali said yesterday of his plans for the oil sector. The inauguration is scheduled to take place on 8 August.

The PPP's five-year term is poised to witness a surge in offshore output. ExxonMobil started production from the deepwater Stabroek block in December 2019, and output reached 100,000 b/d at the end of July. One of the US major's partners, US independent Hess, said last week that August output will reach 120,000 b/d.

ExxonMobil forecasts production of 750,000 b/d by 2025.

The political breakthrough paves the way for further development. ExxonMobil said on 31 July that the impasse was delaying a final investment decision on Payara, a third major project on Stabroek.

But other foreign oil companies face potential contract adjustments. The PPP has signaled that the royalty rate in contracts signed after the ExxonMobil deal should be higher. A royalty increase would impact Chevron and European firms Total, Repsol, Eni and Tullow.

The election commission's declaration of the PPP win over the weekend is based on a vote recount that overturned the tainted result of an initial tally which favored incumbent president David Granger's coalition in 2 March parliamentary and presidential elections.

The Granger government's refusal to recognize the results of the vote recount prompted the US to impose two rounds of targeted sanctions on unnamed Guyanese officials on 15 and 30 July.

Additional pressure also came from the EU, Canada, the UK, Brazil, the OAS and regional trade group Caricom.

By Canute James