Securing oil supply needs
Trade, Tourism and Industry Minister Geoffrey Da Silva recently visited Trinidad and Tobago where the issue of Guyana's possible purchase of oil from the twin-island republic was revisited. Da Silva's trip was preceded by one here by Petrotrin officials. This is definitely an opportune moment for Guyana to re-enter the Trinidad petrol market. The strident rattling of President Chavez's Venezuelan sabre should be a loud enough message to the government in Georgetown that it would be folly to be at the mercy of Caracas for all of this country's oil supplies. To what extent Mr Chavez's inflamed rhetoric against Guyana over his country's re-energised claim to the Essequibo was influenced by internal Venezuelan politics will soon become clear as he has since won an overwhelming victory at the polls. However, it is evident from all that has occurred since he assumed office that Mr Chavez is highly unpredictable and given to governing with great dramatic flourishes. In as sensitive an issue as the controversy that exists between the two countries, his style of governance can have unseen repercussions across a variety of fronts including the supply of oil. We should not be deluded and we should be prepared for the worst even if he were today to offer his personal assurances on the matter. In an atmosphere of rising tension, Guyana's reliance for oil on PDVSA, the Venezuelan national oil company, will exponentially increase this country's vulnerability. And so far Caracas has played hard ball on a number of issues. Its dark mutterings about oil exploration may have effectively ended the prospecting ambitions of Century Oil in this country's maritime zone and may be forcing US multinational, Exxon to rethink its plans. Coming on the heels of the CGX oil rig debacle on the eastern front, this is nothing short of a disaster for our hopes of becoming an oil producer. Venezuela has also upped the decibel levels on the Beal deal though it is left to be seen what practical impact this will have on the project. Under these circumstances it will be strategically indefensible to pursue a one-track oil supply plan with a neighbour as adversarial as Venezuela has been. This same consideration was also prominent in the discussions in the 1980s on whether our national grid should be connected with Venezuela's Guri Dam. Finding at least one other regular oil supplier in the region (certainly not Suriname) would also effectively remove from Venezuela the oil supply weapon. Any cut off of supplies to Guyana could be readily addressed by expanding arrangements with a second or third supplier than if there was none. Hence a cut off of supplies would have little or no practical effect and would therefore not be worth using. It would also send a message to Caracas that Guyana would not sit by passively and see its national interests endangered. The only real consideration would be that of cost. As a large company with 22 refineries, PDVSA will have on its side economies of scale and will more than likely be able to sell oil cheaper than Trinidad as the case is now. However, PDVSA's cost attractiveness cannot outweigh the need to be weaned off of this heavy reliance on Venezuelan oil and to secure firmer strategic ground. Our enhanced international creditworthiness and the write-off of 67% of our bilateral oil debt to Trinidad (with the prospect of more) has also put us in better stead with our CARICOM partner. The remaining debt is being serviced and Trinidad would no doubt welcomed a renewed arrangement on a purely commercial basis. Moreover, Guyana would be sourcing more of its oil needs from within CARICOM. It would be ideal if the government could construct an arrangement whereby we source around 50% of our needs from Caracas and the rest elsewhere. The talks with Petrotrin are therefore a positive step in trying to balance our needs in such a way that our neighbour to the west would think twice before attempting to apply economic pressure.
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