I welcomed the news that another shore base will be constructed at the mouth of the Demerara River, near Vreed-en-Hoop (GT Jul 28) in addition to the one by Tristar in the Malgre Tout, Versailles area. Shore bases are critical for the nascent oil and natural gas industry. It is expected to contribute significantly to the Guyanese economy in the coming years. The exploration, drilling, and extraction of oil and gas offshore in deep water needs a lot of onshore support services of which Guyana lacks required capacity. Currently, there are only one or two companies providing onshore services to the offshore oil industry in Guyana.
These two bases cannot meet the current total demand, and the duopoly results in higher-than-normal charges to service the oil companies. In terms of fees, information reveals that the two shore bases charge substantially higher fees for the 110 miles shipping distance from East Bank to locations in the Stabroek Block given that the alternative would be to go to bases in Trinidad some 400 miles away. The Guyana fee structure considers what oil companies would pay for shipment of goods from Trinidad some four times the journey to the offshore base.
More bases could, therefore, potentially lead to lower costs. And Guyana needs more bases to meet the current and increasing demand of the oil companies as oil production is being ramped up from the current 120K BPD to six times that amount in four years and double that amount five years later. So, more shore bases are definitely needed. And more bases lead to competition that would inevitably lead to lower prices for services. In addition, large amounts of money would be spent in the billions of dollars, creating jobs, putting money in the tax coffers, and raising GDP benefiting the total economy.
The two onshore bases are on the East Bank, very close to the busy Georgetown area. Both are constrained by space requirements and the East Bank Demerara is congested and has traffic issues. The Government should, therefore, encourage construction of shore bases on the West Bank or West Coast and other locations away from the overcrowded city. Exxon should also give preference to use shore bases away from the heart of the city.
A shore base is currently being constructed at Versailles, West Bank by Tristar. It is the only fit-for-purpose shore base in Guyana. Government should offer all the support Tristar needs to expedite construction to quickly get the shore base operationalised. The same should be done for other shore bases; the consortium putting up a shore base at the mouth of the Demerara River should also be supported. More shore bases result in job creation.
It is understood that Tristar’s base is being designed to international standards and will be specific to the oil and gas industry and its needs, which emphasise safety of operations. Moreover, Tristar is 100% owned by Guyanese whose interests and patriotism are towards Guyana, particularly in uplifting communities on the West Bank that were neglected since 2016. Tristar is owned by Krishna Persaud whose roots are in West Dem.
More shore bases on the West Bank or West Coast or elsewhere would lead to an end of the duopoly. Competition among bases that would result in:
1) lowering cost of doing business in the Guyana oil industry;
2) hundreds of millions of dollars of investment that would create hundreds if not thousands of jobs;
3) Use of local contractors in construction and operations that in turn would lead to integration in the oil and gas supply chain of local companies;
4) Greater local content in the oil business – aligned with Government’s policy;
5) high value work that is currently undertaken in in Trinidad would be shifted to Guyana
6) substantial socioeconomic benefits to the West Bank and West Coast Demerara region;
7) Resuscitation of economic activities and commerce in the Wales area that has been negatively impacted by the closure of the sugar factory; revival of business in the West Demerara region, among other benefits.
Dr Vishnu Bisram