Oil and climate change in small states

In his magisterial tome, The New Map: Energy, Climate, and the Clash of Nations, Pulitzer prize-winning author Daniel Yergin asserts: “The main driver today is not energy security, as in past decades, but climate and the mobilization around it, particularly among young people.” ¹ There certainly is credence to this proposition in relation to the world's main geopolitical and geo-economic movers and shakers. However, the circumstances are different for small island developing states (SIDS) in the Caribbean and elsewhere in general, and those in the Guyana-Suriname Basin (GSB) in particular. ² For those countries, both energy security and climate and climate change activism are drivers. This point is evident from the discussion below.

Scholar-statesman Eric Williams, the one-time prime minister of oil-and-gas rich Trinidad and Tobago, once declared: “Oil don’t spoil!” Although this contention is true, Williams did not contemplate a circumstance where a dangerous mix of oil and water in the context of climate change could spoil lives and livelihoods within the oil-and gas-rich societies. Such is the situation with the two nations in the GSB considered here. Technically, the GSB includes the coastal plains of French Guiana, Suriname, Guyana, and eastern Venezuela. However, the focus here is on Guyana and Suriname, the SIDS that are the Caribbean's emerging petro-powers.

Petro power

The GSB is providing Guyana and Suriname with motherloads of black gold, making the two nations that are geographically South American but culturally Caribbean the world's newest petro-powers in the making, with Guyana having the edge. (Unlike Guyana, Suriname has long had on-shore production; oil was discovered in 1928 and production began in 1982 through a state-owned company called Staatsolie, which now produces some sixteen thousand barrels annually.) So far, the known oil reserves in the Basin total more than sixteen billion barrels equivalent and the gas reserves exceed thirty trillion cubic feet. Indeed, since 2015 the oil discovery there alone amounts to 10 percent of the world's conventional oil discovery. The quality of the oil also is noteworthy; it is light and sweet, emitting fewer emissions during the refining process. ³ Guyana's first offshore discovery was made in May 2015 in the Stabroek Block by a three-company consortium comprising ExxonMobil, Hess Corporation, and China's National Offshore Oil Corporation. For Suriname, offshore discovery day was 7 January 2020, with the companies involved being the American-owned Apache Corporation and the French-owned TotalEnergies SE.

Ever since those discoveries, Mother Nature has continued to bestow her bounty on these erstwhile poverty-stricken plural societies. Most recently, in January 2022, two Canadian partners, CGX Energy Inc. and Frontera Energy Corporation, announced a discovery at the Kawa-1 well in the Corentyne block in Guyana. Yet, the CGX-Frontera operation represents just a fraction of the flurry of prospecting, drilling, and other activities in the GSB. The following month, in February 2022, in Suriname, the French-owned company TotalEnergies announced the discovery of a significant oil-and-gas find. ⁴ Two months later, back in Guyana, the ExxonMobil group announced three additional discoveries in April. ⁵ As Guyana's finance minister, Ashni Singh reported in his 16 January 2023 budget speech to the National Assembly, 2022 was an exploration banner year: eleven new wells were drilled, with ten of them in the now famous Stabroek Block, which extends over 6.6 million acres (26,800 km²) of maritime space. ⁶ This brought the total discoveries to forty, with thirty-five in Stabroek alone. An additional discovery was made on 23 January 2023 in the Fangtooth SE-1 well, also in the Stabroek Block. All things considered; Guyana is set to produce about one million barrels per day before the sun sets in the current decade. ⁷

Clearly, Guyana and Suriname are on the cusp of becoming extraordinarily rich. In presenting the 2022 budget to Guyana's National Assembly, Finance Minister Ashni Singh projected an astonishing 47.5 percent growth of the economy in 2022. ⁸ This would dwarf the growth performance of every country in the entire world. Incredibly, too, Guyana is estimated to collect US$150 billion in oil and gas revenues over the ensuing three decades. ⁹ Respected energy analyst Arthur Deakin is confident that “Per capita, Guyana will become the largest producer of oil in the world, passing the likes of the United Arab Emirates (UAE) and Kuwait. Oil revenues could approach US$30 billion dollars a year by 2030, roughly three times the size of both countries’ GDPs … combined.” ¹⁰ Understandably, Suriname's growth and revenue earnings will be much less ample.

The enormous resource endowment of the GSB countries catapults them into a new and powerful geopolitical league both within the Americas and globally. For one, they will command new respect in the hemisphere, provided they manage the resources well. And although Suriname has valuable strategic materials such as bauxite and gold, Guyana's vast agricultural, gold, bauxite, and other strategic assets—and, yes, they have uranium, although it is not mined—will enable its leaders gradually to flex their leadership muscles within CARICOM and beyond. President Irfaan Ali's lead in 2021 in CARICOM's food security pursuits and the keen interest of regional leaders for Guyana to play a role in resolving the April 2022 imbroglio over the candidacy for the secretary general of the Commonwealth are but two recent indications of this.

Yet, the colossal size of the production capacity within the GSB, particularly in the context of the vicissitudes of contemporary world politics with the surge in the price of oil and petrochemical products, among other things, because of Russia's invasion of Ukraine, suggests that global-level geopolitical and geo-economic impact is unavoidable. As Georges Fauriol and Scott MacDonald rightly contend, “[although] the Southern Caribbean is far from Ukraine, the region's energy producers are on the frontline of a global geopolitical realignment. In the decade ahead, the Southern Caribbean is likely to play a much more prominent role on the global energy map, something local leaders will have to weigh carefully.” ¹¹

For all this, though, recalling the assertion by Prime Minister Williams, there is good reason for apprehension that spoilage could occur because of geography and climate change realities; that water, truly, could spoil things.

Wet neighbourhoods

Guyana and Suriname are both in Wet Neighbourhoods, and they share some physical and social geographical features that pose an environmental security threat. I proposed the term “Wet Neighbourhood” in a March 2020 report for the Center for Strategic and International Studies (CSIS) to describe Guyana's tenuous geographic and environmental realities. ¹² Suriname shares many of those realities.

Water is in Guyana's DNA, so to speak. In fact, the word “Guyana” itself is an Indigenous term meaning “land of many waters.” The country has 965 miles of navigable rivers snaking through its 83,000 square miles. It also has some 270 waterfalls. Notable here is the 226-metre-high Kaieteur Falls, the world's largest single-drop waterfall by volume of water flowing over it. In addition to the numerous rivers, waterfalls, ponds, and lakes, a contributor to Guyana's Wet Neighbourhood is the fact that 87 percent of the country is forested, according to the Rainforest Foundation US. ¹³ Moreover, a significant portion of the forestation lies in the Amazon rainforest, which both generates and regulates significant rainfall. The same is true for Suriname, except that the forest coverage there is higher: 93 percent, says the Food and Agricultural Office's Global Forest Resources Assessment 2020. As a matter of fact, Suriname has the distinction of being the most forested nation in the world. ¹⁴

The countries’ coastlines are major—and worrisome—aspects of their Wet Neighbourhoods. Guyana's runs 285 miles along the Atlantic Ocean and is six feet below sea level in some places. The country relies on a combination of measures to protect it from the ocean's wrath. One is a coastal wall, called the Sea Wall, the construction of which dates to 1855 during the time of British rule. Regrettably, maintenance of the Sea Wall has been inadequate over the years, with overflows from the Atlantic Ocean becoming a regular occurrence. Similarly, Suriname has an Atlantic coastline of a little over 217 miles and coastal defences that also have suffered considerable neglect, resulting in regular overflows. Guyana also maintains a network of rivers and canals to channel water from the country's interior to the Atlantic Ocean, along with a system of sluices designed by the Dutch when they colonized Guyana several centuries ago. The sluices are supposed to be closed at high tide, to prevent inundation, and opened at lower tide to allow the outflow of water. Both countries also employ mangrove forests as part of their coastal protection. There, too, neglect over time has diminished the utility of this measure.

Guyana's Wet Neighbourhood realities aggravate the country's environmental security vulnerability, especially because the capital, Georgetown, lies along the coast. Moreover, about 80 percent of the country's population of almost eight-hundred thousand individuals are coastal residents. Likewise, Suriname's capital, Paramaribo, also is situated along the coast, and a similar percentage of its populace of just over 596,000 lives along the coast. Understandably, then, Guyana and Suriname have had to cope with flooding for a considerable part of their modern histories. Guyana's most destructive flood over the last few decades occurred in January 2005, when the country suffered the highest recorded rainfall since 1888, affecting about 84 percent of the population and causing an estimated US$500 million worth of damages. The year 2008 also witnessed one of the most devastating floods in Suriname.

Both Guyana and Suriname experienced severe flooding in 2021. In Guyana's case, the entire country was inundated, and seven of the ten administrative regions were heavily impacted. Almost thirty thousand households in at least three hundred communities were displaced, food prices increased due to shortages, hundreds of farms were destroyed, and some 360 gold mining operations were affected. In May alone, for instance, the rainfall was recorded at 23.9 inches, the second highest deluge since 1981. Indeed, President Mohamed Irfaan Ali issued a disaster declaration and deemed the situation the worst natural disaster in the country's history. In neighbouring Suriname, the flooding began in March 2022, ahead of the high rainy season. Eight of the country's ten districts were waterlogged, homes and farms also were destroyed, mining operations were disrupted, and at least 8,473 households were affected. ¹⁵

The Wet Neighbourhood circumstances of the GSB countries also are affected by other climate change realities. ¹⁶ Take the issue of sea-level rise. Although Guyana and Suriname serve as carbon sinks because of their rainforest coverage and low utilization of fossil fuels, global warming impacts their rainfall, and therefore their flooding experiences. Climate change undoubtedly contributes to higher levels of rainfall. Regarding sea-level rise, a study by the Union of Concerned Scientists (UCS) of the volume of water worldwide that could come from shrinking glaciers and ice sheets led them to project a sea-level rise of between 2.6 feet and 6.6 feet by 2100. The USC study indicated that “the Guyana coast is subsiding owing to groundwater extraction, soil compaction, and drainage of wetlands. From 1951 to 1979, sea level off Guyana rose at a rate some six times the global average (0.4 inch, or 10.2 millimeters per year), around six times the twentieth-century average or three times the 1993 to 2009 annual average.” ¹⁷

For various reasons, the situation has worsened since that study, to the point where in 2021 scientists at Climate Central, an independent group of climate experts, named Georgetown to its list of nine cities around the world likely to be fully or mostly underwater by 2030 because of global warming. Guyana has the dubious distinction of being the only Caribbean or South American nation on that list. ¹⁸ Needless to say, the coastal flooding of Guyana affects more than just its capital. The same is true of Suriname. In October 2016, Cornell University economist Jay Mandle recalled the sobering portrait of the impact of massive flooding provided by the Caribbean Planning for Adaptation to Global Climate Change Project in a report released two years earlier, including the “large-scale disruption of population centres. Movement of people will be inevitable, as increasing inundation and floods will result in destabilization of infra-structure, including buildings, roads, bridges, dams … floodwaters will remain stagnant for longer periods over land which will increase the possibility of the spread of disease. Agriculture will suffer irreversible damages because of salt-water intrusion and inundation. Coastal ecosystems will disappear.” ¹⁹

The situation in Suriname is only slightly less troubling, although in its Nationally Determined Contribution 2020, submitted in December 2019 in fulfillment of obligations under the Paris Agreement on climate change, the government acknowledges that “Suriname is particularly vulnerable to the impacts of climate change. The country's small population, major economic activities, and infrastructure are concentrated along the low-lying coastal zone. It has already experienced extensive coastal erosion, and has suffered damages from heavy rainfall, flooding, higher temperatures during dry seasons, and high winds.” ²⁰

Environmental security

Clearly, then, GSB countries face some clear and present dangers concerning environmental security. Environmental security applies to circumstances where environmental problems severely compromise the ability of state power-holders to exercise normal political, economic, and military rule, which in turn undermines the state's internal governance or external sovereignty. The new wealth—and the understandable expectations of citizens of GSB countries that they benefit from that prosperity—necessitate urgent attention to environmental security issues. Therefore, the leaders of the two nations must act with what Martin Luther King, Jr. once called “a fierce urgency of now” in relation to environmental security.

Although the rising sea levels might only minimally affect offshore drilling, rising waters and other manifestations of climate change disrupt habitation and societal normalcy, such that the wealth would hardly benefit the people there. Especially in Guyana, but also in Suriname, leaders face an existential imperative: to begin using some of the oil revenue to craft what might be called Environmental Security Investment Plans. Such plans could have two components: the first short term and the second long term, with transformational aims. In the short term, immediate priorities would include restoring sea defences; clearing and maintaining canals and dikes, and fortifying revetments; and repairing, replacing, and maintaining water pumps. Key aspects of the second component would involve the restoration and care of mangrove forests and the rehabilitation and maintenance of the coastal walls. Beyond this, the relocation of Georgetown and Paramaribo away from the doorsteps of the Atlantic Ocean is a sine qua non for the societal transformation that leaders and citizens desire and deserve.

Foreign assistance certainly would be necessary to help GSB countries address their extant environmental security challenges. Indeed, Guyana and Suriname currently receive considerable flood mitigation and other climate change-related assistance—on both a bilateral and a multilateral basis. However, they cannot rely just on external assistance to strengthen their environmental security; they need to put some financial “skin in the game.” As regards Suriname, although offshore production there will not begin until 2027, the leaders there do not have the luxury of waiting until then to plan for the investment in their environmental security. Moreover, while Suriname has a Savings and Stability Fund for its earnings from mining, leaders recognize the need for a sovereign wealth fund to cater to their oil royalties.

The relocation of Georgetown has been contemplated since the 1970s, but has been stymied by issues of political will, societal intransigence, and financing. As Mandle has noted, “There is much justified excitement concerning the country's future as a petroleum exporter. But the need to use those funds to settle the Interior has not been the subject of public discussion … Overcoming this reticence and debating the merits of Interior development is something that should begin soon. Without a society-wide dialogue on climate change, the opportunity to forge a consensus on how to use petroleum revenues in responding to coastal flooding will be lost. The risk of such a failure is that when circumstances do finally force the society to relocate, it will be unprepared to do so in an orderly and systematic way.” ²¹

Financing would be the least of the problems for Guyana now, as it has been accumulating its oil fortunes in a sovereign wealth fund called the National Resources Fund. The National Assembly passed the Natural Resource Fund Act 2019 on 3 January 2019. It was later replaced with the Natural Resource Fund Act 2021, which the National Assembly passed on 29 December 2021. The Fund is held by the Federal Reserve Bank in New York. In 2022, 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$1271.8 million. According to the Fund's report for the first quarter of 2023, the balance in the account exceeded US$1 billion—US$1464.57 million to be exact. ²² Yet, no matter how plush Guyana's sovereign wealth fund and whatever fund Suriname creates become, it would be imprudent for those GSB states to have those funds provide the only “skin in the game.” Green bonds, one form of climate financing, could provide complementary support, as part of a broad funding package.

In the final analysis, energy in the GSB certainly stands to drive the economic and social upliftment of the people of the GSB countries in incredible ways. More than this, though, it could be a driver of economic and social change for the wider Caribbean. However, it also is imperative that the GSB countries be at the forefront of climate change activism. Their extant environmental security challenges necessitate this, especially since they find themselves on both the negative and positive sides of the climate change balance sheet: they provide carbon sinks but also produce fossil fuels that add to global warming. Clearly, then, Daniel Yergin's proposition does not hold true for the SIDS in the Caribbean and elsewhere.