The game in Guyana: Why Modi visited this small Caribbean country

Prime Minister Narendra Modi is visiting small Caribbean country of Guyana, the first visit by an Indian PM in 56 years. He received a warm welcome in Guyana as President Irfan Ali broke the protocol to receive PM Modi at the airport. Both Guyana and Barbados, another small Caribbean country, will confer their highest national awards on Modi. People of Indian origin, the biggest ethnic group in Guyana, make up 43.5% of the population. There are around 3,20,000 people of Indian origin in Guyana, according to the Ministry of External Affairs (MEA), which described it as "one of the oldest Indian diasporas, which migrated more than 185 years ago".

"Prime Minister received a rousing and colorful welcome from the Indian community and the Indo-Guyanese diaspora in the presence of several Cabinet Ministers of Guyana," the MEA said in a statement.

However, the presence of a large Indian-origin community is not the only reason PM Modi is visiting Guyana. It may be a tiny country but it is assuming great global significance due to its huge oil reserves. Forging economic relations with smaller countries is part of Modi's agenda to bring together the Global South.

Why India is cosying up to Guyana
Guyana is being seen as one of the most critical growth areas for non-OPEC oil production. By 2026, Guyana is expected to surpass neighboring Venezuela in oil production, making it a pivotal contributor to global oil supply. The rising GDP and sudden riches can also offer a lucrative market for key exports from India.

Guyana has clocked largest GDP per capita growth in the world in recent years. The GDP grew 33% in 2023, after registering growth of 62% in 2022 and 30% in the two previous years.

In 2015, a company discovered 11 billion barrels of oil in Guyana and that set the country on the path of double-digit growth and a better future. The new discoveries of oil equivalent amounted to 18 per cent of total global oil and gas discoveries and 32 per cent of discovered oil. As per OPEC World Oil Outlook 2022, Guyana is projected to see a significant ramp-up in production, with liquids supply growing from 0.1 million barrel per day in 2021 to 0.9 mb/d in 2027.

India, the world's third-biggest oil importer and consumer, is looking to diversify its crude sources, and Guyana offers a good opportunity.

India wants to sign a multi-year oil purchase deal with Guyana and acquire stakes in the South American nation's exploration areas, the Guyanese minister for natural resources had said early this year. "We will make a decision at some point in time" on crude oil sales to India in a long-term deal, Vickram Bharrat told reporters on the sidelines of industry event India Energy Week in Goa. After a meeting with India's oil minister, Hardeep Singh Puri, Bharrat also said Indian companies are interested in picking up stakes in Guyana's exploration acreage through negotiation rather than a bidding process.

At that time, Guyana was planing to launch an exploration bidding round for the relinquished areas of Stabroek and other blocks. "We have some relinquished acreage from Stabroek and other blocks so simply that means possibly we will have a bidding round possibly later this year," he said. Stabroek, a consortium led by Exxon-Mobil that controls offshore production in Guyana, last year was required to return 20% of unexplored acres under the original 2016 production contract.

Before Bharrat's visit, the Union Cabinet had approved the signing of a Memorandum of Understanding (MoU) between the Ministry of Petroleum and Natural Gas, India and the Ministry of Natural Resources, Guyana, on cooperation in the hydrocarbon sector. The MoU covers the complete value chain of hydrocarbon sector including the sourcing of crude oil from Guyana, the participation of Indian companies in Exploration and Production (E&P) sector of Guyana, cooperation in the areas of crude oil refining, capacity building, strengthening bilateral trade, collaboration in natural gas sector, collaboration in developing regulatory policy frameworks in oil and gas sector in Guyana.

Guyana also offers a lucrative defence market to India. The Hindustan Aeronautics Limited (HAL) delivered two Dornier 228 planes to the Guyana Defence Force in April this year. The deal was part of a Line of Credit (LoC) Agreement, the first ever defence LOC that India has signed with any Caribbean nation. Guyana also plans to purchase patrol vehicles, radars and armoured vehicles from India, sources had told ET.

India is already partnering Guyana in several sectors. India has offered credit facilities to Guyana for use in mutually accepted designated fields, agriculture and information technology, being two of these, as per the High Commission of India in Guyana.

Indian companies have also expressed interest in bio fuel, energy, minerals and pharmaceuticals. Total trade turn over remains low, though the trend is positive and encouraging. The Government of India has helped Government of Guyana in completing the following projects such as National Cricket Stadium (USD 25 million), supply and installation of 50 solar traffic lights USD 2.1 million) and drainage pumps (USD 2.9 million) and setting up of a Centre of Excellence in Information Technology (CEIT) (USD 2 million). Some projects are are under completion such as ocean going vessel/passenger ferry, construction fo East Bank East-Coast road linkage, acquisition of fixed and mobile pumps and associated structures and spare, upgradation of three regional hospitals, rice husk gasifier and assistance for quick impact community development projects.

The China angle
China has a massive footprint in Guyana in line with its plan to partner smaller countries across the world in infrastructure projects such as the Belt and Road Initiative. India too is doing its bit to improve Guyana's infrastructure by committing to a USD 100 million road project in the capital, Georgetown. But that's small beginning if India aims to compete with Chinese influence in the country where China is the biggest builder, constructing key infrastructure projects such as roads, bridges and shopping centres, in addition to mining minerals. With Guyana's location in the backyard of the US, it can also offer a strategic foothold for China.

"The huge Chinese presence is largely not welcomed by the local people as they are not employing the local population for their projects. They did initially but now all of their employees are from China. How does it help us in the long run?" a travel agent said while speaking to PTI.

Though it can't match humungous capital China has put into its global economic outreach, India has started competing with China in building its own global infrastructure and energy footprint. Guyana will be a key element in that strategy as more and more money keeps pouring into the small country from sales of newly discovered oil and it expands its infrastructure.

(With inputs from PTI)