While the prospects for economic growth for Guyana have accelerated since oil finds and sale of the commodity began, the environmental costs are being totted up and declared to be heading for the red.

In its April 2022 World Economic Outlook, the International Monetary Fund (IMF) projected a nearly 50 per cent rate of economic growth for Guyana, adding that the country is expected to record a 34.5 per cent increase in 2023 and a 3.7 per cent increase by 2027.

But, a new report placed by WiredJA News cites World Bank criticism of the Guyanese Government’s offshore oil production arrangement with ExxonMobil based on safety, environmental concerns and inadequate payment.

Consequently, the World Bank has downgraded its rating of Guyana’s oversight of the project, it was noted.

Meanwhile, the international body, the Institute for Energy Economics and Financial Analysis (IEEFA) has commented that Guyana is getting too little of the project revenue and is also at risk due to inadequate environmental and fiscal contract requirements.

In all, critics say Exxon’s contract terms are lopsided. According to industry analysts at IHS Markit, an information services provider, “Exxon receives more than 85 per cent of the proceeds, the result of the government and public largely “absorbing Exxon’s costs”, according to the IEEFA, the WiredJA report stated.

Guyana’s oil reserves are estimated at over 11 billion barrels, the third-largest in Latin America and the Caribbean according to the IMF, and among the highest in the world relative to the country’s population size.

But critics forecast a future of lost opportunities. Guyanese citizens have filed a constitutional climate case to challenge fossil fuel production which they say exacerbates global warming and threatens human rights.

WiredJA stated, “The case, before Guyana’s Constitutional Court, claims that Guyana’s approval of a massive, ExxonMobil-led oil and gas build-out off the country’s coast violates the Government’s legal duty to protect the rights to a healthy environment, sustainable development, and the rights of future generations. The case reflects a growing concern within Guyana regarding the risks oil extraction poses on a national, regional, and international level.”

“An oil and gas industry is difficult to reconcile with [Guyana’s] international environmental commitments and the constitution,” comments Guyanese attorney-at-law Ronald Burch-Smith.

Among the charges against Exxon are inadequate safeguards for Liza 1, a project spanning more than 6million acres off the coast of Guyana that includes 17 additional prospects in the exploration and preparatory phases.

WiredJA said experts claim that Exxon in Guyana appears to be taking advantage of an unprepared government in one of the lowest-income nations in South America, “allowing the company to skirt necessary oversight”.

In March 2022, the World Bank issued an interim report that found the country’s rating had slipped from “Moderately Satisfactory” to “Moderately Unsatisfactory”, the article said.

The World Bank said that while grant activities have been designed to help Guyana boost staff, experts, training and analysis at the Ministry of Natural Resources and Ministry of Finance, this came to a halt at the end of 2021. This is despite the fact that grants made to the country were expected to support work through 2024. Meanwhile, flaring pollution and other risks continue.