The predicted slump in oil prices in the next year reinforces the need to secure early investments in the local petroleum sector and for government to continue to push ahead with development projects.
This point was made by Vice President Dr Bharrat Jagdeo during his weekly Press conference on Thursday.
International experts have indicated that oil prices will drop to $60 per barrel in 2025 due to overproduction, large inventories and reduced demand. This represents a potential decline of over 20% compared to current market expectations.
Jagdeo pointed out that when the price for the commodity declines, it will be difficult to “lock in” investments.
“Beyond that date, you’re not going to get investments to go in to the sector because there is no demand for it so nobody will invest because their assets would be stranded and they would make huge financial losses so what you have to do is to make sure that even before the fall off in demand…that you secure your investments early,” he said.
The Vice President pointed out that Guyana has secured six Floating Production Storage and Offloading (FPSO) vessels which will take production to 1.3M barrels of oil per day.
“Very, very few countries in the world have been able to secure that investment,” he noted.
However, on the other side of the spectrum, he emphasised that future planning must be done carefully, especially on recurring expenses like wages and salaries, to ensure sustainability.
Jagdeo urged critics to consider the whole picture when speaking about Guyana’s petroleum sector.
International organisations like the International Energy Agency (IEA) advise oil producers to hedge against potential price drops and recommend investors capitalise on short-term price increases.
CNN recently reported that by 2030, global oil supply will outstrip demand by a “staggering” 8 million barrels per day, according to forecasts published by the IEA in its medium-term oil market report.
