Rigs to Riches: Transforming Offshore Oil Windfalls into Digital Capital in Guyana and LAC

Breccan Corzine - MSc Philosophy and Public Policy 

Sudden resource abundance has the potential to impart developing nations with a double-edged sword for which they lack the experience to control.  One edge can fuel rapid economic growth and sustainability, while the other exposes these nations to corruption, foreign exploitation, and economic instability.  History shows a proclivity for these resource-rich countries to teeter towards disorder.  Venezuela’s collapse into corruption, Ecuador’s struggles with oil dependence, and the Netherlands lasting lesson from the phenomenon known as Dutch Disease all underscore how over-reliance on hard commodity extraction can leave economies vulnerable. 

This article argues that Guyana should leverage its recent oil windfall by investing in digital infrastructure with the intention of building a diversified and sustainable economy that is better shielded from the challenges that threaten petrostates.  Digital infrastructure offers a stable economic foundation, strengthened digital sovereignty, and a boost to regional trade that can help Guyana avoid the commodity volatility that has devastated neighboring Latin American and Caribbean (LAC) nations. 

Guyana and the Discovery of Oil 

Guyana is a South American country of roughly 800,000 people bordered by Brazil, Suriname, Venezuela, with an Atlantic-facing eastern coast.  Following oil discoveries over the last decade, Guyana has experienced rapid economic change and an influx of foreign industrial investment.  In 2015, ExxonMobil announced a commercially significant oil discovery ① on the Stabroek block, an oil and natural gas field some 120 miles offshore Guyana.  The Stabroek block is controlled by a consortium of three interest groups ②: ExxonMobil’s affiliate ExxonMobil Guyana Limited holds a 45% stake and serves as operator; Hess Guyana Exploration Ltd holds 30% interest; and CNOOC Petroleum Guyana Limited, a subsidiary of the Chinese state-owned oil company CNOOC Limited, holds a 25% interest.   

The Exxon-led consortium has invested nearly US$60 billion to develop seven offshore oil extraction projects.  Yellowtail, the fourth project, has been recently ramped up to production capacity.  Exxon claims that, as a result, the Stabroek block has hit a production milestone ③ of 900,000 barrels of oil per day (abbreviated as “bpd” from here on).  Three more government sanctioned projects Uaru, Whiptail, and Hammerhead are expected to become operational in 2026, 2027, and 2029, respectively.  An eighth project, pending regulatory approval, will increase total production capacity ④ to 1.7 million bpd by 2030. 

Once one of the poorest nations in South America, Guyana has now achieved double digit GDP growth for the fifth year in a row and holds the world’s highest real GDP growth rate in the world ⑤ at 47% annually since 2022.  This growth has been driven primarily by the booming oil sector, which saw a remarkable growth rate of 57.7% in 2024.  As the region’s fifth largest oil-producer ⑥, Guyana has doubled its production from an average of 391,000 bpd in 2023 to 616,000 bpd in 2024.  In addition, Guyana’s oil revenues rose from US$1.62 billion in 2023 to US$2.57 billion in 2024.  Expansion of the oil sector has placed the small country at the focal point of regional and foreign interests, bringing both immense wealth and potential challenges for the Guyanese government to mitigate.  To illustrate the importance of oil for Guyana’s economy, it is necessary to take a closer look at the relationship between GDP and oil prices. 

Data Sources: World Bank Group Commodity Price Pink Sheet ⑦ and World Bank Group Development Indicators for Guyana ⑧.  Analysis and visualisation by Breccan Corzine using R programming. 

The above graphics present a regression analysis to examine the relationship between oil prices and Guyana’s GDP.  The model uses real values over nominal to avoid spurious correlation from inflation, specifically, Brent crude oil prices in constant 2010 US$ and GDP in 2015 US$.  Spurious correlation occurs when inflation artificially inflates both variables, creating misleading correlations.  The analysis utilised the following log-log regression model: log(GDP) = α + β·log(Oil Price) + ε.  Logarithmically scaling the variables reduces skewness, stabilizes variance, and minimizes heteroscedasticity to improve the reliability of the model.  Log-log specifications also allow coefficient beta to be interpreted as an elasticity.  That is to say that a 1% change in oil prices corresponds to a beta% change in GDP. 

Results reveal a dramatic structural break in 2015 following Exxon’s major oil discoveries.  For the full sample period (1960-2024), the elasticity is 0.385 (p<0.001, R² = 0.37), meaning a 1% increase in oil prices is associated with a 0.39% increase in GDP.  However, in the post-2015 period (2015-2024), elasticity surges to 1.877 (p=0.078, R² = 0.34).  This is to say that a 1% oil price increase is associated with a 1.88% GDP increase.  Overall, this analysis tells us that GDP became highly correlated with oil price fluctuations as Guyana transformed into an oil-dependent economy.  

There are a few important limitations of this model to mention.  First, these results show correlation, not causation.  While the positive relationship is theoretically consistent with Guyana becoming a petrostate, the model doesn’t establish that oil prices directly cause GDP change.  Second, the post-2015 analysis relies on 10 observations, which accounts for its marginal significance outside of the conventional 5% threshold.  The 95% confidence interval for the post-2015 elasticity is wide [-0.27, 4.02] and incudes zero, reflecting this uncertainty.  Third, the residuals show systematic patterns (negative in 2015-2019 and positive in 2020-2024), suggesting a simple log-log model may not fully capture the complexity of the relationship, especially without considering more variables like foreign investment and oil production volumes.

Understanding the period of production ramp up is particularly limited by this.  These limitations do not invalidate the findings, however.  The structural break is economically meaningful even if statistical certainty is limited to some extent.  The goals of this model were to identify the abrupt pattern break in the data following Guyana’s 2015 oil discovery and demonstrate a linear correlation between GDP and oil price volatility, which it has accomplished. 

Dutch Disease and Hard Commodity Dependency 

Oil discoveries in developing nations are a volatile catalyst for economic transformation.  Sudden resource abundance presents the opportunity for prosperity but comes with the ever-looming threat of resource curse.  Also known as the paradox of plenty, resource curse ⑨ is the tendency for resource-rich countries to see less economic growth, worse development outcomes, more conflict, and more authoritarianism than countries lacking in natural resources.   

One of the core mechanisms by which the resource curse arises is Dutch Disease ⑩.  In the 1960’s the Netherlands discovered natural gas in the North Sea.  As more foreign currency flowed into its economy, the Dutch guilder strengthened.  The real interest rate appreciated, causing traditional non-oil exports to lose their competitiveness as they became more expensive.  In addition, there was a substantial shift of labor and capital towards the resource sector to the detriment of other sectors like manufacturing and agriculture.  As a result, the economy became imbalanced and dependent on a single commodity with high volatility. 

Having discovered oil deposits in 1922, Venezuela’s economic mismanagement ⑪ quickly became one of the most extreme cases of Dutch Disease.  By 1935, the Venezuelan bolivar had rapidly appreciated, and the oil sector exceeded 90% of total exports. When oil prices collapsed so did the economy.  Oil production plummeted from 3 million bpd in 1998 to less than 500,000 bpd by 2020.  The effects of the Venezuelan government’s mismanagement can be seen in the nation’s hyperinflation, the large percentage of the population falling into poverty, and the scarcity of basic goods. 

Ecuador has followed a similar, but less catastrophic, path.  Oil accounts for 30% of Ecuador’s total exports.  However, annual oil production is estimated to be the lowest in the last ten years.  In addition, Ecuador has nearly $4.4 billion in oil-backed debt ⑫.  With a debt-to-GDP ratio of 62% Ecuador’s ability to repay is critically tied to its oil production.  It is also an example of Dutch Disease, since its resource wealth is not following a path of economic prosperity and instead has caused strain on all other sectors of the economy. 

Guyana is at risk of the same economic illness.  Last year, the oil sector grew ⑥ 57.7% while the non-oil sector grew a mere 13.1%.  This is a sign of economic imbalance, as oil comes to dominate the Guyana’s economy the more foreign investment is put towards it.  It also exhibits other classic symptoms of Dutch Disease like a shift in labor away from manufacturing and agriculture towards the oil industry.  The volatility of oil prices compounds these structural vulnerabilities since the price of crude is subject to wild fluctuations outside of Guyana’s control.  Designing the national budget around commodity windfalls is a recipe for disaster that will hamper long-term planning for education, healthcare, and other critical infrastructure.  While things are not as dire as other commodity-dependent LAC petrostates, Guyana is at the precipice of suffering the same fate and must take immediate action. 

Digital Infrastructure: An Opportunity for Diversification 

Since the risk for resource curse hangs above every oil-dependent country, there is a commendable model response to resource wealth that Guyana should take into consideration.  Norway’s Government Pension Fund Global ⑬ (GPF-G) was formed following the 1969 discovery of one of the world’s largest offshore oilfields.  Instead of falling into the trap of a short-term focus, Norway decided to develop a sovereign wealth fund in 1990 to safeguard the Norwegian economy in the long-term from the plights of hard commodity dependence.  It is funded by the surplus income of the Norwegian petroleum industry and contains investment in around 9000 foreign companies.  The idea is that the government spends only a small portion of the fund to respond to economic downturns in the future.  Additionally, by only spending less than the expected real return of the fund, oil wealth is trickled into the economy gradually instead of all at once.  Norway has converted finite petroleum resources into a permanent financial portfolio that generates sustainable returns with diversified exposure to market volatility. 

Guyana can adapt this model with a crucial adjustment: prioritizing infrastructure investments that directly strengthen digital economic capacity.  As Guyana is still a developing nation, it needs a growth-oriented plan for where its sovereign fund should be spent.  If spending guidelines are not clear, the potential for corruption and mismanagement of the fund threaten its long-term efficacy.  Investment in broadband networks, data centers, and digital skills education, offer unique advantages for small economies.  Digital infrastructure enables productivity gains across all economic sectors and expands access to global and regional markets.  Most importantly of all, it creates high-value employment opportunities that are insulated from commodity fluctuation and promote long-term socio-economic development.   

Research from the Inter-American Development Bank (IDB) suggests that closing digital infrastructure gaps to OECD levels in LAC economies could yield a regional GDP growth between 6 to 12 percent in the medium-term.  One report by the IDB ⑭ notes that the payoffs for investing in digital infrastructure are large, with potential GDP gains that range from 2 to 50 times the initial investment.  In Guyana, investment in digital infrastructure is crucial and time sensitive.  Proactive engagement will improve service delivery across sectors such as education, healthcare, and agriculture.  This will help it avoid the pitfalls that lead to a dominant oil sector that prevents other sectors from flourishing. 

To facilitate this, Guyana should follow the advice of the World Bank ⑮ and appeal to public-private partnerships (PPPs).  Combining public policy goals with private sector expertise through investment is a sure way to advance Guyana’s digital infrastructure.  The government can work closely with private companies to build and maintain digital resources, such as high-speed internet and data centers.  The idea is to leverage the strengths of both sectors to accelerate the nation’s digital transformation and promote collaboration between public and private decision makers. 

Further Considerations: Data Sovereignty and Environmental Sustainability 

There are two additional factors to account for before offering policy recommendations.  First, data sovereignty should be kept at the forefront of the decision-making process.  In small, developing economies vulnerabilities are created by reliance on foreign-owned digital infrastructure.  Guyana along with other LAC nations should develop self-reliant digital ecosystems.  Instead of relying on foreign investment and external service providers, LAC should develop strategic partnerships that ensure control over critical infrastructure and reduce dependencies.  Regional cooperation also has the benefit of pooled resources.  By jointly developing regional infrastructure, small nations can gain collective sovereignty over their digital infrastructure that would be impossible in isolation.  Guyana is well-poised to initiate this regional overhaul. 

Second, digital infrastructure investments can be an end that justifies advancing environmental sustainability.  Countries like Guyana that are home to coastal winds and lots of sun are readily available for sustainable energy production.  Incentives to build up digital infrastructure can be used to initiate a move from fossil fuels to renewable energy, thereby reducing environmental impact while increasing productivity.  Diversified energy sources also prepare Guyana for future variable conditions.  Oil wells run dry and global climate policies change.  Economies built on digital foundations will thrive while nearby petrostates struggle to stay afloat.  Therefore, a resilient economy must be sustainable in the face of both market volatility and shifting environmental conditions. 

Policy Recommendations 

1. Guyana should establish a sovereign wealth fund using its oil windfall akin to Norway’s GPF-G ⑬.  This fund should allocate a fixed percentage of 20% of investment income to digital infrastructure development.  This ensures that Guyana will be able to scale its digital diversification regardless of short-term fluctuations in commodity prices.   

   
   

2. Government investment into digital infrastructure should engage with the private sector.  PPPs can accelerate broadband connection, data center construction, and educational program development.  Working closely with the International Finance Corporation (IFC) shows promise ⑮ as they have proven success facilitating public-private partnerships. 

   
   

3. Guyana should pursue regional cooperation.  The Digital Economy for Latin America and the Caribbean ⑯ framework provides neighboring LAC countries with individualized paths towards digital growth.  Guyana should adopt similar strategies to harmonize regulations, enable cross-border e-commerce, and develop digital payment systems that promote regional trade.  Furthermore, shared infrastructure like regional fiber optic networks could reduce connectivity costs while maintaining data sovereignty in the region. 

   
   

4. Without human capital, investment in infrastructure will be meaningless.  The government must invest in digital literacy and provide the resources for its citizens to pursue technical training.  Technology transfer agreements may be a way for Guyana to use the resources of more advanced economies to accelerate their domestic skills.  

   
   

5. Following the inspiration of the Norwegian GPF-G model ⑰, Guyana’s digital infrastructure fund should maintain a strict code of ethical and spending guidelines.  This is necessary to avoid corruption and mismanagement of the sovereign wealth fund.  

Concluding Remarks 

Guyana stands at a historical crossroads.  Its 2015 oil windfall offers the opportunity to break the resource curse that has devastated other LAC countries like Venezuela and Ecuador.  Norway demonstrates a possible path from resource wealth to a sustainable economy.  However, this requires planning, financial discipline, and careful investment.  If Guyana wishes to avoid the effects of Dutch Disease, it should aim to establish a sovereign wealth fund that bolsters digital infrastructure.  It generates future returns, enhances productivity across all sectors, creates high-quality employment opportunities for the Guyanese, and positions the nation for regional trade. 

The broader LAC region should watch Guyana’s trajectory closely.  Many nations face similar choices about the management of their own resource wealth, economic diversification, and development strategy.  Whether Guyana follows Venezuela’s path towards commodity dependency and collapse or Norway’s toward diversified prosperity will provide a lesson for the entire region.  By transforming offshore oil windfalls into digital capital, Guyana can build the foundation necessary for its developing nation to flourish.  

Sources 

① «ExxonMobil announces significant oil discovery offshore Guyana», ExxonMobil, 20 May 2015. 

② «Guyana», CNOOC International, 2025 

③ «Daily oil production hits 900,000 barrels in Guyana's Stabroek block», ExxonMobil, 12 Nov 2025. 

④ «Guyana 2024 Annual Report», ExxonMobil, 2024 

⑤ «Guyana: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Guyana», International Monetary Fund, 7 May 2025. 

⑥ Kemol King & Marriana Parraga, «Oil output, exports drove Guyana economy's growth of 43.6% in 2024», Reuters, 21 Jan 2025. 

⑦ «Commodity Pink Sheet Data», World Bank Group, Dec 2025 

⑧ «Guyana Development Indicators», World Bank Group, Dec 2025 

⑨ «The Resource Curse», National Resource Governance Institute, Mar 2015. 

⑩ Christine Ebrahimzadeh, «Dutch Disease: Wealth Managed Unwisely», international Monetary Fund, (No Date) 

⑪ William Rampe, Rocio Cara Labrador, and Will Merrow «Venezuela: The Rise and Fall of a Petrostate», Council on Foreign Relations, 31 July 2024. 

⑫ Fabio Lugano, «Ecuador: La spirale mortale del petrolio che trascina l’economia (e i conti pubblici) a fondo», Scenari Economici, 21 Oct 2025 

⑬ «About the Fund», Norges Bank Investment Management, (No Date) 

⑭ «Digital Infrastructure and Development in the Caribbean», Inter-American Development Bank, 10 Jan 2022. 

⑮ Juan Pablo Celis and Miguel Pereira Mendes, «Latin America and the Caribbean’s digitization: Time to scale-up investments», World Bank Blogs, 17 June 2021. 

⑯ «Digital Economy for Latin America and Caribbean» World Bank, (No Date) 

⑰ «Responsible Investment», Norges Bank Investment Management, (No Date)