Black Immigrant Daily News

By Ivelaw Lloyd Griffith

This is the first of a two-part series on the ongoing territorial-judicial saga between Guyana and Venezuela. Here we provide some recent developments on Guyana’s oil exploration and production landscape, which have increased the stakes for both nations. In Part II, we examine some of the security investments the government is making while the judicial drama plays out.

Waiting, but …

In a two-part series in OilNOW last fall I described the Guyana-Venezuela territorial drama as a waiting game, in that it evokes memories of the award-winning play Waiting for Godot by the famous Irish playwright Samuel Beckett.[1] The waiting game began in 1962, when Venezuela first formally challenged the validity of the Paris Arbitral Award that had settled the dispute between the Bolivarian Republic and Great Britain over the colony then called British Guiana in 1899. The drama assumed new dimensions when, with green-lightening by the United Nations Secretary General, Guyana took the matter to the International Court of Justice (ICJ) in 2018 after other resolution efforts pursued over several decades had failed.

In keeping with its rules, the Court needed to consider whether it had jurisdiction to hear the case. After deciding in December 2020 that it did, indeed, have the relevant jurisdiction, in March 2021 it gave Guyana until March 8, 2022, to submit its Memorial (case brief) and Venezuela until March 8, 2023, to present its Counter-Memorial. The expectation was that, all things considered, a ruling on the substantive case would be made by March 2024.

However, the waiting game assumed new dimensions last June when Venezuela filed preliminary objections to the admissibility of Guyana’s petition. Under ICJ rules, the proceedings on the merits had to be suspended. Guyana was then given until October 7, 2022, to file a response to the objections and the Court held hearings on the preliminary objections from November 17 through November 22, last. The Court likely will render its judgment on Venezuela’s objections by the end of this coming April. So, the waiting game continues.

Waiting is not a strategy, though. As such, the government has been aggressively pursuing its national development goals, including extracting more of its newly found natural resource and investing some of the revenue derived from it. As Finance Minister Ashni Singh reported in his January 16, 2023, Budget Speech in the National Assembly, 2022 was an exploration banner year: 11 new wells were drilled, 10 of them being in the now famous Stabroek Block, which extends over 6.6 million acres (26,800 square kilometers) of maritime space. The new discoveries brought the total discoveries to 40, with 35 in Stabroek alone. Moreover, in December 2022, the authorities launched a new Licensing Round, which will run through this coming April.

Production continued apace, allowing for 102 lifts of crude oil, with revenues augmenting the sovereign wealth fund, called the National Resource Fund. Last year the Fund received just over US$1,099 million. After the transfer of US$607.6 to the government’s budget to fund various initiatives, the Fund had a 2022 end-of-year balance of US$1,271.8 million. The new year brought new bounty to the Land of Many Waters, with an additional discovery on January 23 in the Fangtooth SE-1 well, also in the Stabroek Block.

Towards 1 million barrels per day

Also noteworthy is that the Payara project is expected to begin production later this year, yielding some 220,000 barrels per day, and another project, named Yellowtail, is expected to come on stream in 2025 and produce about 250,000 barrels of crude per day. This should be followed by the Uaru project, which is anticipated to produce another 250,000 barrels per day following start-up in 2027. As a result, the country is set to produce about one million barrels per day before the sun sets on the current decade.

Although Venezuela’s energy profile dwarfs that of Guyana, South America’s sole English-speaking republic now boasts having proven more than 11 billion barrels equivalent of recoverable oil and gas. In all likelihood, this figure will increase as exploration continues to reveal the existence of more black gold. Consequently, Guyana is well positioned to reap enormous wealth, which would enable the nation to be propelled into a development stratosphere not contemplated a few years ago. Indeed, last year the non-oil real GDP growth was pegged at 11.5 percent and the overall economy was estimated to grow by some 62 percent, making Guyana’s economy the fastest growing one in the world.

There is, therefore, confidence about robust economic growth and long-term revenues from oil. Last month the finance minister assured parliament that “there will be 136 lifts of profit oil from the Stabroek Block in 2023. Within this, Government is projected to have 17 lifts of profit oil from the producing FPSOs (Floating Production, Storage and Offloading vessels), earning an estimated US$1,406.6 million in profit oil and US$225.2 million in royalties in 2023.”[2]

Thus, the waiting game continues. But Guyana’s leaders do not have the luxury to simply wait on the ICJ decision; they have the obligation to attend contentiously to the welfare of the nation, which includes addressing matters crucial to its national interest, a key aspect of which pertains to its territorial integrity. In this respect, in a May 2021 OilNOW opinion I argued that pragmatism necessitated the pursuit of complementary imperatives – things that need to be actioned, not just spoken about. For me–then and now–three key imperatives pertain to public education, diplomacy, and investing in security assets.[3] Commentary on the first two are reserved for another time, but the third imperative–investment in security–will be the subject of attention in Part II.

[1] See “Venezuela’s latest move in its waiting game with Guyana, pt. 2,” OilNOW, September 7, 2022, available at Venezuela’s latest move in its waiting game with Guyana, pt. 2 OilNOW.

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Black Immigrant Daily News

Over 50 technocratsfrom 18 CCRIF Caribbean member countries and two regional organizations, met face-to-face in Miami over two days – February 16 and 17, 2023 – to deepen their knowledge and understanding of CCRIF’s parametric insurance models and products.

CCRIF also took the opportunity to share with members the upgrades to its tropical cyclone, excess rainfall and earthquake models that are expected to underpin the Facility’s policies for the 2023/24 policy year which begins on June 1, 2023.

The workshop also allowed for virtual participation and about an additional 16 persons from member countries and regional organizations participated online over the two days.

Participants at the technical workshop included officials from the ministries of finance, meteorological officers and disaster risk managers. The various sessions of the workshop allowed participants to delve deeper into the:

o Hazard, exposure and vulnerability modules of the tropical cyclone, excess rainfall and earthquake models and the construct of these modules including the data used

o Upgrades to the CCRIF models and the rationale for the upgrades

o Elements of CCRIF policies (attachment point, exhaustion point, ceding percentage) and how and when policies are triggered

o Use of CCRIF WeMAp – CCRIF’s web-based platform through which members can monitor earthquakes as well as the development of potentially damaging heavy rainfall and tropical cyclones, analyze their intensity and assess their impact, as well as check whether an active insurance policy with CCRIF is likely to be triggered

o Need for incorporating several disaster risk financing (DRF) instruments as part of a government’s financial protection strategy. Trevor Anderson of Jamaica’s Ministry of Finance and the Public Service shared Jamaica’s experience with DRF tools and its approaches to risk layering.

One particularly interesting session was the evolution of CCRIF’s parametric insurance models: The Journey from EQECAT to SPHERA and Beyond. CCRIF’s ability to provide parametric insurance coverage has always been underpinned by its parametric insurance models – which have evolved over the years… moving from off-the-shelf models to CCRIF-customized models and finally to models that are fully owned by CCRIF and designed specifically for the Caribbean and Central American countries.

According to CCRIF CEO, Isaac Anthony, “From its inception, CCRIF has based its operations on continuous improvement, and this has emerged as one of the coreprinciples underpinning the corporate governance framework of the Facility.” As new data and changes and improvements in model development emerge, CCRIF engages in model upgrades to ensure that its members can purchase parametric insurance policies underpinned by the best models of the time, that reduce the incidence of basis risk – a characteristic inherent in parametric insurance.

Anthony further stated that “CCRIF is a sound financial institution and a development insurance company, serving the Caribbean and Central America, providing rapidpayouts to governments within 14 days of a catastrophic event when policies are triggered, even for multi-country impact events as was the case of Hurricanes Maria and Irma in 2017 and more recently Hurricanes Iota and Eta, which impacted several countries in both regions simultaneously.”

The workshop was led by CCRIF CEO, Isaac Anthony and facilitated by members of the CCRIF management team and CCRIF’s service provider teams ERN-RED and Sustainability Managers. The workshop was made possible with financial support from the European Union in the framework of the Caribbean Regional Resilience Building Facility, managed by the Global Facility for Disaster Reduction and Recovery (GFDRR).

Today CCRIF provides parametric insurance coverage for tropical cyclones, earthquakes andexcess rainfall and the fisheries sector to Caribbean and Central American governments and for tropical cyclones to Caribbean electric utility companies.

Since its inception in 2007, CCRIF has made 58 payouts, totalling US$260 million to 16 of its 24 members. During the 2022 Hurricane Season, CCRIF made 4 payouts totalling US$15.2 million to 3 of its member governments all within 14 days of the event. CCRIF has been designed to fill the liquidity gap to support immediate needs of the government and affected populations and infrastructure, and therefore occupies that critical space in post-disaster needs of governments, between immediate relief (0 – 5 days after an event) and long-term reconstruction and recovery.

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