United Nations General Assembly
Galvanizing multilateral efforts for poverty eradication, quality education, climate action and inclusion.
During UNGA over 100 people died in monsoon floods as torrential rain drenched north India Uttar Pradesh and Bihar Gujarat, Uttarakhand, Madhya Pradesh and Rajasthan.
The heaviest monsoon rains in 25 years killed over 1,600 people since June.
The Oil and Gas Climate Initiative
Bloomberg – CEOs of nine of the world’s largest oil and gas companies addressed an opening event of Climate Week in New York . OGCI is the industry-supported organization whose members set targets to reduce methane emissions and gas flaring. Chief executive officers of were among leaders who took questions from reporters and activists.
Ben van Beurden, CEO, Royal Dutch Shell:
“Ultimately, (the) Paris (agreement on climate) is going to be met..In the end it is the responsibility of industry, companies like us, to make sure that the transition is going to be as orderly as possible and not going to be disruptive.”
“Natural gas could be a part of the solution.”
Darren Woods, CEO, Exxon Mobil:
The energy industry has gone through transitions for decades. “I don’t see this a threat, it’s an evolution of the industry” and from past experiences evolution is driven by technology. “We look at that challenge as a natural evolution.”
Patrick Pouyanne, CEO, Total:
“The only question is the pace at which society — not only us — society will accept to make this transformation.”
Christiana Figueres, former Executive Secretary of the United Nations Framework Convention on Climate Change:
The energy industry could “either put the nail in the coffin of all the global efforts (on climate change) or be the industry that develops and delivers the solution.”
“Let it not be questioned that we have to be net zero (carbon emissions) by 2050. That is ’50 at the latest.”
Mark Brownstein, Senior Vice President, Environmental Defense Fund:
The energy industry gets an “A” for effort but not for following through with actions. While the OGCI represents about 30% of global oil and gas production, that could be more than 50% if it brings on board the national oil companies and other partners. “Some may need to be brought along kicking and screaming.”
Ahmad Al Khowaiter, CTO, Saudi Aramco:
The dual issue of rising energy needs and climate concerns is “something that we struggle with as an industry. It’s something we also see as critical.”
First low-hanging fruit is transportation. “The need is so great and the time is so short.”
Vicki Hollub, CEO, Occidental Petroleum:
Carbon capture, utilization and storage (CCUS) technology is there but has to be exploited on a broad scale. Occidental wants to build the world’s largest atmospheric carbon capture plant in the Permian Basin. When it comes to acting on climate change, “failure is not an option.”
Eldar Saetre, CEO, Equinor:
“Flaring is one of the biggest issues as it’s a waste and bad for the industry’s reputation…we can do something about it.”
Mike Wirth, CEO, Chevron:
“Very soon nobody is going to be able to hide from methane leakage” because of satellites and other detection technologies.”
India/CARICOM Meeting
At the India/CARICOM meeting on 25 September on the sidelines of the 74th Session of the UNGA,, CARICOM leaders and Prime Minister Narendra Modi, focused on areas of priority for deeper cooperation including funding for resilience against climate change, human resource development, strengthening technical capacity, health and education. A joint India/CARICOM task force will develop and implement concrete plans to further advance trade and facilitate diversification in the region.
Prime Minister Rowley also held talks with Prime Minister Erna Solberg on Norway’s critical role as a mediator working to facilitate dialogue between parties in Venezuela.
Bahamas Petroleum Company maiden well
Seadrill’s Sevan Louisiana rig
BPC, the petroleum exploration company with significant prospective resources in licences in The Bahamas, has further cut the estimated cost of its upcoming exploration well in The Bahamas, as it works to secure funds for drilling.
Illustration: While BPC has yet to officially say which rig will be used for the job, the company in a September presentation showed the photo of Seadrill’s Sevan Louisiana rig.
BPC received funding offers for the first well to be drilled in 2020 offshore the Bahamas, in its acreage with “a multi-billion-barrel potential.” BPC is in talks regarding a potential farm-in, its preferred option to secure the required well funding.
BPC spent over $100 million on technical work such as seismic acquisition, interpretation and studies over Bahamas blocks located near the maritime border with Cuba, acquired in 2007. BPC won an extension until the end of 2020 with the obligation to drill an exploration well at 4 commercially co-joined offshore licenses, Bain, Cooper, Donaldson and Eneas at water depths of around 500 meters (1500 feet). BPC acreage has a low minimum economic field size at c. 150 million barrels, with an estimated break-even price of $30 – 40 a barrel.
BPC has been unsuccessfully trying to secure a farm-in partner for its offshore acreage, to help fund the obligatory exploration well. This has driven the company to seek alternative options and BPC may drill it alone, subject to securing the necessary funds. BPC entered into a conditional agreement with Bizzell Capital Partners Pty Ltd (“BCI”) for a convertible loan investment of £10.25 million (approximately US$12.5 million). BPC reached agreements with Seadrill for an offshore drilling rig for the well and with BHGE and Halliburton for well services and equipment.
BPC offshore acreage map / Source: BPC
Loan or partner
The well cost estimate had been in the range of US$25 million to US$30 million, “a material reduction from prior estimates (previously in the range of US$60 million to US$ 80 million for a single well).” BPC provided an even lower estimate for the well cost – $20 million to $25 million. This still means that BPC, subject to getting the $12,5 million from BCI, will have enough cash to fund only half of the exploration well costs.
In case no farmout partner is found Simon Potter, Chief Executive Officer of BPC said: “The Company has also received four other funding proposals (some of which individually but certainly all in aggregate, if contracted and fully drawn-down, would cover the anticipated cost of the well), as well as multiple other expressions of interest, all of which are .. being evaluated. We hope over the near-term .. to advise shareholders of further progress ….”
While evaluating funding proposals, the company is still hoping to find a farm-out partner. “To date, the company’s focus has been predominantly on securing funding via a farm-in agreement and farm-in discussions are continuing. Multiple parties are currently engaged in ongoing due diligence and commercial discussions and it remains the company’s preference to secure all or part of the required well funding through this structure.“
A Seadrill rig would be deployed in the Bahamas in the first half of 2020 and would arrive from its current working location in the nearby Gulf of Mexico. The drilling plan might be extended to a two-well program should funding permit.
Under the agreement, the firm contract for the offshore drilling rig, subject to various conditions, is to be signed by October 11, 2019, at the latest, the date by which BPC needs to prove to Seadrill it has the funds needed to pay for the contract.
While BPC has yet to officially say which rig is being considered for the job, the company published a presentation in which it said it would use a 6th generation Seadrill drilling unitand showed a photo of Seadrill’s Sevan Louisiana rig. The dayrate would be US$215,000 ( when the full well cost estimate was $25 million to $30 million).
BPC used the Sevan Louisiana image for illustration only, as nowhere in the presentation was the rig explicitly named. However, there are reasons to believe this rig specifically might be used for BPC’s first offshore well. According to data on Bassoe Analytics, there are currently six Seadrill/Seadrill Partners rigs in the U.S. GOM region, three of them being 6th gen units- the Sevan Louisiana, the West Capricorn and the West Sirius.
Bassoe Data shows the 2008-built West Sirius to be cold-stacked – meaning out of the Bahamas drilling equation. The West Capricorn is soon to complete its contract with LLOG, and move on a new deal with Kosmos, also in the Gulf of Mexico. The Sevan Louisiana contract with Walter Oil & Gas was suspended from operations in February while repairs were being performed and resumed the Gulf of Mexico work in August. Both the Sevan Lousiana and the West Capricorn contracts are expected to end in December 2019.
Bahamas Petroleum interim results
Bahamas Petroleum announced its interim results for the six months ended 30 June 2019.
Period Highlights:
- Extension of the second exploration period in respect of the Company’s licences to 31 December 2020.
- Technical, environmental and operational activities progressed with a view to commencing drilling of a first exploration well in first half 2020.
Post Period End:
- Entered into framework agreement with Seadrill for the provision of a rig in 1H 2020; appointed Halliburton for integrated well services and BakerHughes GE for provision of various well-related equipment
- £10.25m ($12.5m) conditional convertible loan note to underpin finance necessary for the drilling of the well if required, additional finance sources being evaluated, farm-in process continues
- AGM approval for the temporary authority for issue of new shares to further contribute to the financing of drilling, if required
Financial
- Decrease of 12% of ‘other expenses’ compared to the prior six month period due to Company’s cost control programme, despite significant activity in the Period
- 19% reduction in operating loss on comparative six month period, when adjusted for write-offs agreed by CEO to remuneration package in the prior period
- Successfully raised $2.5m in working capital to continue the technical, environmental and operational work in support of well planning
Simon Potter, Chief Executive Officer, said:‘2019 has proved to be a year of positive progress and developments for BPC, with a number of key milestones having been achieved. The extension of our licences to December 2020 and the requirement to commence the drilling of our obligation well in this timeframe has given us a renewed clarity of focus. Accordingly, we have begun taking all necessary steps to secure in principle the rig, oilfield services and equipment we need, from leading global suppliers, that will enable us to responsibly deliver our first well. At the same time we are also pursuing a number of potential financing options.
‘On behalf of the Board and staff of BPC, I would like to thank The Government of The Bahamas and all of our shareholders for their continued support of the Company. I believe that the next 6-9 months will be a company making time for BPC, and I look forward to providing further updates as we progress toward the drilling of an initial exploration well in 1H 2020.’
Source: Bahamas Petroleum
BPC technical update ahead of exploration drilling
In an update to shareholders, oil and gas explorer Bahamas Petroleum, with significant prospective resources in licences in The Bahamas, announced a coordinated approach toward drilling an initial exploration well(s).
In support of ongoing farm-in / funding discussions, BPC is undertaking a range of related technical work to systematically reduce and mitigate play and prospect risk while seeking to optimise location of the upcoming exploration well(s) targeting the large structures that form the Company’s sizeable prospect inventory.
Bahamas Petroleum exploration licences and applications
As it moves forward to drilling operations, the Company has directed additional technical work in support of a successful initial exploration well(s), by: (a) seeking to increase confidence in the presence of hydrocarbons within the large structures to be drilled and therefore further reducing the play and prospect risks on the significant volumes of resource contained therein, and (b) optimising the location of the proposed exploration well(s), so as to maximise the chance of both operational and commercial success.
Consistent with these objectives, over the last several months the Company has undertaken four separate subsurface studies, in each case making use of expert third-party consultants. A description of and the conclusions derived from each study are summarised below. Each of these studies has now been included in the Company’s extensive technical data room.
Taken collectively, these studies highlight the likely presence and quality of a world-class source rock and petroleum system located precisely in the BPC licence area, with charge and migration pathways evident to deliver hydrocarbons into the identified structures. The Company believes that hydrocarbon indicators have now been established from the 3D data with the reservoir rock demonstrating a well-developed fault and fracture system that will significantly influence the final selection of exploration well(s) drill sites so as to provide the highest confidence of encountering hydrocarbons.
1. Seismic Attribute Mapping – Self Organising Maps (SOM)
To maximise the flow of fluids from the surrounding reservoir into the well bore, it will be important to site the exploration well(s) in a location where the well bore intersects the optimal site for the development of fault and fracture systems. The Company has thus undertaken a seismic attribute study of its 3D data, making use of leading-edge industry technology. The objective is to better determine the fracture and fault network local to proposed well locations.
The Company has predicted that the structural thrusting and folding genesis of the carbonate reservoir lithologies within the drill prospects would naturally lead to significant fracturing and thus enhanced reservoir quality. The attribute mapping study has now clearly demonstrated the presence and delineation of an extensive fracture and fault system within the 3D seismic area, thus validating what had been predicted. The Company considers this to be an extremely positive result. Increasing understanding of reservoir porosity and permeability will assist in the final, optimal positioning of the exploration well(s) inside any potential ‘sweet spots’ within the fracture / faulting network. This will maximize the chance of detecting hydrocarbons in the exploration well, in a way that the Company expects would maximize flow rates in a success case with knock-on impacts to potential future production economics.
2. Geophysical / seismic interpretation
A common industry pre-drill evaluation step for exploration in frontier basins is obtaining supporting geophysical evidence in the form of amplitude, attribute or anomaly analysis of seismic data. However, in the types of carbonate rock systems which characterise BPC’s prospects, detailed analysis is more complex than for other rock systems. Notwithstanding this complexity, the Company has successfully undertaken a detailed evaluation of seismic amplitude, attribute and velocity from the Company’s 3D data.
Importantly, these studies have demonstrated:
I. what the Company and its consultants believe to be direct hydrocarbon indicators (DHI’s), consistent with an indicative presence of hydrocarbons within mapped structures;
II. strong amplitude conformance to structure, with amplitude termination / switch-off against faults and variation with depth, characteristics that are usually indicative of the presence of reservoir porosity and permeability; and,
III. seismic interval velocity reduction and variations between the target structure and the surrounding areas, characteristics that are usually suggestive of fracture porosity within the folded structure and detection of reservoir intervals within structural closure.
The Company considers the results of these studies to be significant, in that they may directly indicate the presence of hydrocarbons in the structure(s) at the intended drilling location(s). This adds to the sizeable body of evidence, derived both internally and from independent advisors and experts, in support of the Company’s view that technical risk of the prospects is relatively low, thereby increasing confidence in a successful outcome of the exploration well(s).
3. Paleogeographic reconstruction
A Jurassic hydrocarbon source rock is ubiquitous across the region, and is known to generate hydrocarbons in the major production fields of the Gulf of Mexico and northern South America. In order to further increase technical confidence for potential petroleum systems and source rock distribution directly at the location of the Company licences a detailed paleogeographic and conjugate margin reconstruction study of the Caribbean, Northern South America and West Africa has been undertaken.
This study has corroborated the likely presence of a Late Jurassic oil-prone source rock and active petroleum system in the Santaren Channel, which is the precise location of BPC’s licences and the intended drill site. This Late Jurassic source rock is analogous to the Smackover interval producing in deep-water Eastern US Gulf of Mexico, and has also been calibrated as the source of nearby onshore Cuba oil production. This Late Jurassic source rock is in addition to the previously recognised Early Cretaceous source rock in the region, also sourcing production in nearby Cuba and onshore Florida.
4. Cuban oil sample analysis
Through a reciprocal technical cooperation agreement with the Cuban National Oil Company (“CUPET”), the Company accessed 3D seismic data adjoining the BPC licence areas in Cuban waters. CUPET provided to BPC oil samples that were subsequently independently analysed to assess the age and chemistry of the source rock linked to onshore production in Cuba.
The Cuban 3D seismic and oil sample data corroborated the likely source rock charging the Company’s drill prospects as late Jurassic. This is the same age and type of petroleum system, Bossier-Smackover, that charges the deepwater fields in the Eastern US Gulf of Mexico and nearby Cuba.
Simon Potter, Chief Executive Officer of Bahamas Petroleum said:
‘As we move forward operationally, and in view of ongoing farm-in and funding discussions, we have continued to undertake related technical studies. The objective of this work has been to further reduce subsurface risk by demonstrating the existence and quality of the petroleum system components, and also to optimise the location of the wells we intend to drill. We are most encouraged that these four most recent studies have each produced positive results, which when taken together support the potential presence of hydrocarbons in identified fractured networks, thereby serving to further technically de-risk the drill candidates and reconfirming our view that our prospects in The Bahamas represent a drill ready, potentially multi-billion barrel prospect inventory.‘
Source: Bahamas Petroleum
Sagicor Financial Corporation
Sagicor donated US$300,000 to support recovery in The Bahamas following Hurricane Dorian and
committed to provide material and match all cash contributions by its staff and financial advisers.
Ravi Rambarran, Group Chief Operating Officer said, “Our vision is to improve the lives of people in the communities in which we operate. Our contributions to the relief efforts will be coordinated through our Associated Company in the Bahamas, Family Guardian Insurance Company”.
The 179-year-old, leading financial services company in the Caribbean and the USA, offers life insurance, accident and health insurance, annuities, pensions, banking, asset management, general insurance, and real estate services. Sagicor has equity of US$1.2 billion and assets of US$7.9 billion.
Buckeye Bahamas Hub
BBH, the largest petroleum products terminal in the Western Hemisphere sustained no significant damage from Hurricane Dorian, Buckeye Partners, L.P. reported. Early conclusion about its condition following the catastrophic hurricane stems from “preliminary assessments, subject to physical verification.” The company will conduct more conclusive “in-depth, on-the-ground inspections and assessments” of Dorian’s impact on BBH. “As the hurricane moves away from Grand Bahama Island, Buckeye’s first priority is accounting for the safety of all employees and their families.”
The 80-tank BBH located near Freeport on Grand Bahama with over 26 million barrels of storage capacity and 8 berths is the leading regional hub , providing storage, blending and other services for crude oil, fuel oil, vacuum gas oil (VGO), diesel fuel, gasoline and other components. .
Consistent with action n 2016 when Hurricane Matthew struck Buckeye intends to work with business partners, first responders and the authorities to bring supplies to the islands. The health and wellbeing of its workforce, communities where it operates and the Bahamian people are Buckeye’s top priority.
Equinor Oil Storage Terminal
Norwegian oil and gas company Equinor reported that there is no observed leakage of oil to the sea from its South Riding Point terminal in the Bahamas.
South Riding Point terminal Bahamas; – Source: Equinor
In the aftermath of Hurricane Dorian, Equinor said it would clean up the oil from its South Riding Point oil terminal, spilled due to damage caused by the hurricane.
To support the broader relief efforts , Equinor donated USD 1 million.
Equinor has an ongoing operation to respond to and clean up the oil spill. Equinor has a team at South Riding Point terminal including an onshore response team with oil spill technical specialist. Over 200 personnel are working with the response in Bahamas, the US, and in Norway.
Their objective is to address the situation at the South Riding Point terminal and to ensure the safety and well-being of employees and their families. Two vessels are mobilized for the response at the South Riding Point terminal with 42 personnel and onshore oil spill recovery equipment. The vessels include, containment booms, absorbent pads/rolls, oil spill recovery skimmers, wash pumps, roll-off boxes for collection generated waste, light towers, and smaller boats and protection equipment.
Reducing risk of additional spills
Operations are ongoing to secure the oil at the terminal. Oil from damaged tanks was moved to remaining tanks to reduce the risk of additional spills. An oil boom was deployed to close the harbor at the terminal as a precautionary measure and to reduce the risk of oil spill to sea.
Two trucks started recovery and transport of bulk free-standing oil on the ground to one of the tanks at the terminal. Equinor completed the initial surveillance of the terminal and surrounding areas. There is currently no observed leakage of oil to the sea from the South Riding Point terminal.
Aerial surveillance identified potential product in open waters 70-80 kilometers northeast of the terminal within Long Point Bight close to Little Abaco Island. There are indications that the product may have impacted a section of the coastline. Although the source of this product is not known, Equinor will investigate and further evaluate necessary actions, including mobilization of suitable equipment and resources.
Grand Bahama Shipyard (GBS) has officially resumed operations.
Grand Bahama Shipyard welcomes its first commercial vessel Image Courtesy: Grand Bahama Shipyard
Its first commercial vessel following Hurricane Dorian, the 57,062-ton crude oil tanker Agathonissos, owned by Greece-based Eletson, returned to the yard to complete repair works that began before the hurricane.
The shipyard remains on track for the next planned cruise ship visit, Carnival Cruise Line’s Carnival Ecstasy, scheduled to arrive on October 5. Grand Bahama Shipyard expects to service 29 dry-dockings throughout the remainder of the year. The damage from the storm was limited to some erosion with no effect on berths. It is able to fully power core operations, including docks, workshops and administrative functions, as well as communications infrastructure.
First Ship to Drydock at Grand Bahama
Taipei Trader in Grand Bahama Shipyardzoom
Image Courtesy: Grand Bahama Shipyard/ Carnival Corporation
The Grand Bahama Shipyard has dry-docked its first vessel since reopening the shipyard after Hurricane Dorian.
Taipei Trader, a 9,932-ton containership operated by Lomar Shipping Limited, docked at the No. 3 dock , marking a major step in the return of normal operations to the shipyard.
The vessel first docked at the yard on August 25 for a routine program including propulsion and thruster maintenance and preparation of the hull for protective coating application. On August 30, in accordance with the shipyard’s hurricane procedures, the vessel undocked and depart. Following the return and docking of Taipei Trader, Grand Bahama Shipyard resumed maintenance work and repairs on the ship, which are expected to be completed in October.
Oil rush in Guyana-Suriname Basin
Oil exploration drilling offshore is booming after Tullow Oil deep water success.
Guyana is active with exploration and first production is next year by an ExxonMobil-led consortium at the deepwater Stabroek Block which with Tullow and other operators, plans more wells in the next 12 months.
Suriname hopes to replicate Guyana’s success in one of the few emerging areas of large oil prospectivity. Despite a number of dry holes in recent years, several operators have wells planned for Suriname, hoping that petroliferous rocks extend across the border.
US Geological Survey in 2002 assessed the Guyana-Suriname basin at about 13 billion barrels of oil. USGS oil and gas assessment chief Chris Schenk said the agency expects to reevaluate it next year.
“The whole area appears to be characterized by excellent quality reservoirs” in deep and also shallow waters, Tullow CEO Paul McDade said , speaking chiefly of Guyana. “This should lead to relatively standard kind of … development options in the event of discoveries.“
Guyana production is projected to average 40,000 b/d in 2020 and 160,000 b/d in 2023, based on oil produced by ExxonMobil’s partnership, which will bring the 120,000 b/d Liza Phase One project online in early 2020.
Phase Two will add another 180,000-220,000 b/d by mid-2022. A third development at Payara, should be sanctioned in late 2019. Stabroek alone should produce more than 750,000 b/d by 2025 from five production facilities.
Tullow followed Jethro on the Orinduik block with Joe, further west. Results from Carapa, a Repsol-operated well on the Kanuku block to the south , are expected by Q4.
Jethro holds about 100 million recoverable barrels of oil equivalent and is situated in the northeast corner of Orinduik, bordering Stabroek, the first rival find in a petroliferous region but Suriname has yet to prove itself as oil-rich as its neighbor.
Tullow plans further exploration next year across Orinduik and Carapa.
ExxonMobil and partners Hess and CNOOC, made 14 of Guyana’s 16 oil discoveries. They are now preparing to spud two exploration wells in the country by year-end 2019 after the Tripletail find. Hess, ExxonMobil and smaller partners will drill the Kaieteur block to the north next year.
Kosmos Energy and Apache drilled at least four non-commercial wells in as many years in Suriname.
Despite setbacks at two Suriname wells – Kolibri on Block 53 in 2017 and Popokai on its 1.44 million-acre Block 58 in 2015 – Apache spud another well on Block 58. The tract borders Stabroek fields and is near Haimara, the ExxonMobil group’s southeasternmost find on, or very near, the maritime border. , Apache has not said if the well, which should take 30 to 60 days to drill and is one of several more wells permitted in Suriname, would directly offset Haimara.
“When we look at the views across by ..stitching together the 2-D and 3-D data [from Suriname] and taking into account Guyana activity going on next door, … the geologic setting is not changing much, But it’s exploration.“
APACHE BLOCK HAS SEVEN PLAY TYPES
There are seven play types and over 50 large prospects in the block from which to select targets.
In 2020 Tullow may drill the Goliathberg-Voltzberg prospect on Suriname Block 47 in 1,900 meters of water with partners Pluspetrol and Ratio Exploration. Kosmos, which drilled the non-commercial Pontoenoe well on Block 42 last October and the Anapai well in Block 45 in June 2018, still plans exploration. Kosmos was mulling the Walker prospect for 2020 drilling on Block 42, which is also adjacent to the Turbot area of southeast Stabroek in Guyana. Hess sees Turbot as a target-rich area and said recently it is expected to become a major development hub.
Companies holding acreage in Suriname, include Cairn Energy and Equinor and their respective partners,.Anadarko Petroleum (which was absorbed into Occidental Petroleum in early August) and CGX each operate separate blocks with partners in Guyana.
The Guianas comprise Guyana, formerly British Guiana; Suriname, formerly Dutch Guiana and French Guiana, parts of eastern Venezuela on the west – Spanish Guyana- and Brazil’s Amapa state to the east – Portuguese Guiana.
N.B. EVENTS
1. AAPG WORSHOP ON GUYANA BASIN
SURINAME
6-7 NOVEMBER 2019
……………………………………….
2. SEG Workshop
Advances in Marine Seismic Technology
Hyatt Regency Trinidad
Port of Spain, Trinidad And Tobago
10 – 12 Nov 2019
Kristi Casey, CMP
Senior Meeting Planner
kcasey@seg.org
…………………………………………………………………
IMF Staff Completes Review Mission to Jamaica
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.
The IMF team congratulates Jamaica for the successful completion of the country’s economic reform program supported by the IMF’s Stand-By Arrangement. The authorities’ exemplary program implementation has resulted in a stronger economy with significant reduction in vulnerabilities, and increased job creation.
Broad-based ownership across stakeholders and the continued commitment to public accountability through the Economic Programme Oversight Committee, have been hallmarks of Jamaica’s approach to economic reform.
Sustaining resilient and inclusive growth will require addressing deep-rooted societal challenges such as crime, governance, access to finance, disaster preparedness and resilience, and providing greater social support for the vulnerable.
An International Monetary Fund (IMF) staff team led by Ms. Uma Ramakrishnan visited Kingston from September 9–19, to conduct discussions on the sixth and final review of Jamaica’s financial and economic program supported by the IMF’s precautionary Stand-By Arrangement (SBA). At the end of this review, Prime Minister Andrew Holness of Jamaica and Mr. Alejandro Werner, Director of IMF’s Western Hemisphere Department, issued the following statement in Kingston:
“We are happy to announce that the IMF staff team and the Jamaican authorities agreed on the steps needed to complete the sixth and final review under the SBA, as Jamaica prepares to exit from IMF financial support. Consideration by the IMF’s Executive Board of the review is tentatively scheduled for November 2019. Upon approval, an additional SDR 160.8 million (about US$220 million) will be made available for Jamaica, bringing the total accessible credit to about US$1.63 billion. The Jamaican authorities continue to view the SBA as precautionary. The SBA will expire on November 8, 2019.
“Over the last three years, Jamaica’s sustained commitment to a home-grown economic reform program has resulted in significant dividends for the people of Jamaica. Unemployment is at an all-time low of 7.8 percent, taxes have been reduced, business confidence is high, inflation and the external current account deficits are low, and the level of foreign currency reserves is comfortable at about US$3.5 billion.
“The economy is estimated to have expanded by 1.9 percent in FY18/19, buoyed by mining, construction and tourism. However, the short-term growth outlook is, unfortunately, clouded by the pending 18 to 24 months closure of Alpart to facilitate investment upgrades.
“Budget discipline combined with a reorientation of the fiscal system, including the shift from direct to indirect taxes pioneered by this government, has helped put public debt on a sustained downward path. Proactive liability management—as evidenced by the latest successful swap of existing bonds at relatively low yield—has also helped Jamaica maintain the path towards reducing debt to 60 percent of GDP by FY2025/26, in line with the provisions of the Fiscal Responsibility Law.
“Significant efforts have been made to build monetary institutions and improve the workings of the foreign exchange market. These steps have put the Bank of Jamaica firmly on a path toward operational independence within an inflation targeting framework that conforms with international best practice.
“Nonetheless, to fully achieve Jamaica’s considerable potential will require renewed attention to supply side reforms to address crime, support agricultural resilience, and invest in education and healthcare. The government is also committed to expanding social assistance for those in need through better coverage of the PATH program and support for the elderly.
“To make these reforms a reality will require the freeing-up of fiscal resources through a meaningful transformation of the public sector that prioritizes government functions and redesigns public sector compensation. This will necessarily entail the Jamaican society confronting tough choices, the resolution of which will require broad social consensus. More also needs to be done to build public trust in the governance of public institutions.
“As part of its commitment to building durable domestic policy institutions, the government will table legislation to establish a Fiscal Council by April 2020. In the interim, the Economic Programme Oversight Committee has been asked to ensure continued public accountability for the government’s economic policy commitments.
“The government is also working to strengthen financial sector oversight through better risk-based and consolidated supervision and a special resolution regime for financial institutions.
“We are convinced that all these policies will support private sector development and increase investment opportunities in Jamaica. It is expected that the partnership between the public and private sector to expand access to finance for small- and medium-sized enterprises will help finance such investments.
“The IMF team and the Jamaican authorities look forward to a continued productive collaboration and partnership as Jamaica exits from the precautionary SBA. As always, the IMF stands ready to support Jamaica with policy advice, a cross-country perspective, technical assistance and investments to train Jamaican government officials.
“The IMF team would like to thank the Jamaican authorities, including all the technical teams involved, for making the SBA an unqualified success for Jamaica.”
IMF Staff Concludes Visit to Barbados
September 6, 2019
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board meeting.
Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program.
At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by Bert van Selm visited Bridgetown from September 3–6, to discuss implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF). A concluding meeting was held with Prime Minister Mottley on September 6, 2019. To summarize the mission’s findings, Mr. van Selm made the following statement:
“Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program.
“All indicative targets for end-June under the EFF have been met. The target for the government’s primary surplus was met with a wide margin, with the government running a primary surplus of 2½ percent of (annual) GDP in the first quarter of FY2019/20. This bodes well for achieving the government’s primary surplus target of 6 percent of GDP for FY2019/20. International reserves were also well over program targets at end-June.
“Good progress has been made in implementing end-June and July 2019 structural benchmarks under the EFF. The authorities have completed a review of the tax system and the Governor General has proclaimed the recently enacted Financial Management and Audit Act.
“Progress being made by the authorities in furthering good-faith discussions with external creditors is welcome. Continuing open dialogue and sharing of information will remain important in concluding an orderly debt restructuring process.
“The team is looking forward to return to Barbados in November to conduct the discussions for the Article IV and second review under the EFF and would like to thank the authorities and the technical team for their openness and candid discussions.”
IMF Communications Department
UWI Antigua
The first principal of the newly established Five Islands Campus of the University of the West Indies (UWI) in Antigua is Professor Stafford Griffith. Born in Guyana, the distinguished scholar faces difficult decisions, requiring wisdom and experience.
He was in the School of Education at UWI where he served as Pro Vice-Chancellor. He was chairman of CXC, guiding the CXC in curriculum development, programme development, assessment and measurement.
Griffith stated that the value of higher education for economic development is illustrated by the impact of a University of the West Indies campus in Jamaica, Barbados, and Trinidad and Tobago on their socio-economic development.
He urged OECS member states to take advantage of the opportunities that the Five Islands Campus provides to the sub region, a catalyst for their further growth and development. The new campus should mpact the growth and development of Antigua and Barbuda and provides an opportunity for citizens of Antigua and Barbuda to obtain a university education at a much lower cost than they would have had to bear if they had to travel to another country and seek accommodation to complete their education. Students will be able to maintain their jobs and i employers will have an immediate stream of benefits from the improved expertise, as they pursue their courses of study.
The global digital age is on the cusp of the fourth industrial revolution “into a world of artificial intelligence and virtual reality,” which pose challenges to the region’s competitiveness and economic survival. Consequentially, the region needs to develop “a much larger pool of highly skilled … highly trained graduates, who can take advantage of the current state of knowledge and adapt it, to ensure benefits derived from the global economy.
The Five Islands Campus as part of the University of the West Indies system that ranks at the top five per cent of the universities in the world has the potential to provide that much needed education and training for citizens of the OECS with quality faculties.
Two Phase admission to UWI Five Islands Campus
Student admission will be in two phases in this first year of operation where classes began. The second phase of registration will be in January 2020. The first semester will utilize full time and part-time faculty from specialists resident in Antigua and Barbuda. This will be supplemented with specialists drawn from other campuses of the University of the West Indies.
There will be a mixture of expertise drawn from various places. The standard expected for a course of study at the Five Islands Campus is the same as that of other campuses of the university. The matriculation requirements … are the same. The courses of study are of the same quality. The examinations (will) reflect a common standard and the grades awarded reflect the same level of accomplishment. Five Islands is a full campus of the University of the West Indies – subject to the same regulations as the other campuses of this university.
A core mission of UWI is to undertake research that is relevant to the development needs of region and to create students to engage in this research. The Five Islands Campus as part of the reputable University of the West indies will be engaging in research that is socially and developmentally relevant to the people of Antigua and Barbuda, and the rest of the region in a range of disciplines beginning with those covered by the three schools with which the campus has already started: Humanities and Education; Health and Behavioral Sciences; Management, Science and Technology.
St. Vincent and the Grenadines has a seat on the UN Security Council.
Of 32 islands and cays in SVG nine are inhabited, including the mainland St. Vincent and the Grenadines islands: Young Island, Bequia, Mustique, Canouan, Union Island, Mayreau, Petit St Vincent and Palm Island. Tobago Cays National Marine Park is located within SVG.
UAE-Caribbean Renewable Energy Fund
The (UAE-CREF) is a US$50 million initiative that aims to deliver renewable energy projects across 16 Caribbean Island nations to help reduce reliance on fossil-fuel imports, increase energy access, and enhance climate change resilience. The UAE-CREF is the largest renewable energy initiative of its kind in the Caribbean region. It is fully financed by the Abu Dhabi Fund for Development (ADFD), the UAE’s leading national entity for international development aid. The fund is a partnership between the Ministry of Foreign Affairs and Cooperation (MoFAIC), ADFD, and Masdar, who is leading the design and implementation of the projects. The renewable energy projects are being developed and delivered in three cycles. In March 2019, the first three renewable energy projects from Cycle 1 were inaugurated.
Under construction on Union Island, the 600kW solar PV plant is connected to a 637 kilowatt-hour (kWh) lithium-ion battery, extending its generating capacity to supply 100 per cent of Union Island’s daytime power requirements. Union Island’s energy costs are currently almost 50 per cent higher than those of the main island of Saint Vincent.The project sets a strong precedent for using renewable energy to drive down energy costs on its outer islands.
The Bahamas: Thomas A. Robinson National Stadium Carport Power Plant
The 925 kilowatt (kW) solar photovoltaic (PV) plant at the national stadium, which also serves as a carport with 152 parking spaces including 4 spots for families and 2 spots with fast charging electric vehicle (EV) charging stations, is the country’s first large-scale solar energy project. Developed in partnership with the Bahamas Ministry of Environment and Housing, it sets a regulatory precedent for new renewable energy plants to feed into the grid.
Barbados: Bridgetown 350kW Solar PV Carport Power Plant & Bowmanston 500kW Solar PV Power Plant
This project has two elements: a 350kW solar PV carport with 124 parking spaces, which include six level 2 EV charging stations, and a 500kW ground-mounted PV plant. Both projects were developed in partnership with the Barbados Water Authority and are built on sites operated by the authority. The project supports BWA operations at their water treatment plant and the water pumping station.
Barbuda: UAE-Caribbean Renewable Energy Fund (UAE-CREF) announced a partnership to restore power to Barbuda after Hurricane Irma caused extensive damage to the island in September 2017 through a hybrid solar-diesel power station featuring hurricane-resistant battery storage, with partners including Government of Antigua and Barbuda’s Ministry of Public Utilities, Civil Aviation, Transport, and Energy; Caricom Development Fund (CDF); and New Zealand Ministry of Foreign Affairs and Trade (NZMFAT).
The Agreement, part of UAE-CREF’s second round of funding, covers the distribution of $5.7m (AED20.9m) from the UAE to support Antigua and Barbuda through a renewable energy initiative, and comes after UAE-CREF committed $3.5m (AED12.8m) during the first round of funding in 2017, and $700,000 (AED2.5m) of humanitarian funding in the immediate aftermath of Hurricane Irma in 2017.
The Government of Antigua and Barbuda is investing $1m through CDF. The Government of New Zealand is donating $500,000 to build the project, which will displace approximately 260,000 litres of diesel fuel per year, saving the Government of Antigua and Barbuda $320,000 and offsetting 690 tonnes of CO2 each year.
Hurricane Irma, according to UAE state news agency, Wam, “destroyed 95% of the island on 6 September 2017,forcing all 1,800 residents to be evacuated to Antigua”.
UAE-CREF will implement the project in partnership with the UAE’s Ministry of Foreign Affairs and International Cooperation, Abu Dhabi Fund for Development (ADFD), and Abu Dhabi Future Energy Company (Masdar), the latter of which will be responsible for project design and implementation.
Commenting on the partnership, the UAE’s Assistant Minister of Foreign Affairs and International Cooperation for International Development Affairs, Sultan Al Shamsi, said:”After the devastation caused by Hurricane Irma in Barbuda, we are not only trying to restore electricity to the island we will work to rebuild it even better.
“Providing the island with a solar power plant will solve its energy crisis, provide clean, environmentally friendly energy, and improve the living conditions of islanders who will operate and maintain the new solar power plant to help reduce the impact of climate change.” Masdar’s chief executive officer, Mohamed Jameel Al Ramahi, said that given the damage caused by Hurricane Dorian in The Bahamas, UAE-CREF’s hurricane-resistant solar projects were “vital” in the Caribbean. “It is a privilege to support our partners on this extremely important project that will rebuild Barbuda’s electricity system to give the .. inhabitants access to a reliable and sustainable supply of electrical power.“
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OBITUARY
Lady Lois Ramphal
Past president of Commonwealth Countries League which supports education of girls. she was the beloved wife of Sir Shridath Ramphal GCMG AC ONZ OE OCC QC , second Commonwealth Secretary-General from 1975 to 1990, Foreign Minister of Guyana from 1972 to 1975 and Assistant Attorney General of the West Indies Federation from 1958 to 1962.
Conrad Gorinsky of Guyana, biologist, 1936-2018
Born near the Amazon rainforest in Guyana to a Polish gold prospector and an Amerindian mother , he studied botany and chemistry at London University and gained a PhD at St Bart’s Hospital, isolating chemicals. of the greenheart and other forest plants. He was a catalyst for the UN’Convention on Biodiversity which nationalised plant resources and forbade the patenting of organic ingredients by individuals. to protect traditional knowledge of the properties of plants. As a lecturer at Oxford, he built an ethnobotanical laboratory and was a fellow at Green College. He was founder of Foundation for Ethnobiology.
IMF WORKING PAPER
TRINITY STRIKES BACK: MONETARY INDEPENDENCE AND INFLATION IN THE CARIBBEAN
BY SERHAN CEVIK AND TIANLE ZHU
© 2019 INTERNATIONAL MONETARY FUND WP/19/197
IMF WORKING PAPER
WESTERN HEMISPHERE DEPARTMENT
AUTHORIZED FOR DISTRIBUTION BY UMA RAMAKRISHNAN
SEPTEMBER 2019
ABSTRACT
MONETARY INDEPENDENCE IS AT THE CORE OF THE MACROECONOMIC POLICY TRILEMMA
STATING THAT AN INDEPENDENT MONETARY POLICY, A FIXED EXCHANGE RATE AND FREE MOVEMENT OF CAPITAL CANNOT EXIST AT THE SAME TIME. THIS STUDY EXAMINES THE RELATIONSHIP BETWEEN MONETARY AUTONOMY AND INFLATION DYNAMICS IN A PANEL OF CARIBBEAN COUNTRIES OVER THE PERIOD 1980–2017.
THE EMPIRICAL RESULTS SHOW THAT MONETARY INDEPENDENCE IS A SIGNIFICANT FACTOR IN DETERMINING INFLATION, EVEN AFTER CONTROLLING FOR MACROECONOMIC DEVELOPMENTS. IN OTHER WORDS, GREATER MONETARY POLICY INDEPENDENCE, MEASURED AS A COUNTRY’S ABILITY TO CONDUCT ITS OWN MONETARY POLICY FOR DOMESTIC PURPOSES INDEPENDENT OF EXTERNAL MONETARY INFLUENCES, LEADS TO LOWER CONSUMER PRICE INFLATION.
THIS RELATIONSHIP—ROBUST TO ALTERNATIVE SPECIFICATIONS AND ESTIMATION METHODOLOGIES—HAS CLEAR POLICY IMPLICATIONS, ESPECIALLY FOR COUNTRIES THAT MAINTAIN PEGGED EXCHANGE RATES RELATIVE TO THE U.S. DOLLAR WITH A CRITICAL BEARING ON MONETARY AUTONOMY.
JEL CLASSIFICATION NUMBERS: E43, E52, E58, F41, F42
KEYWORDS: MACROECONOMIC TRILEMMA; MONETARY INDEPENDENCE; EXCHANGE RATE FEXIBILITY; INFLATION
THE AUTHORS WOULD LIKE TO THANK UMA RAMAKRISHNAN AND THE PARTICIPANTS OF A SEMINAR AT THE WESTERN HEMISPHERE DEPARTMENT OF THE INTERNATIONAL MONETARY FUND FOR THEIR INSIGHTFUL COMMENTS AND SUGGESTIONS.
IMF WORKING PAPERS DESCRIBE RESEARCH IN PROGRESS BY THE AUTHOR(S) AND ARE PUBLISHED TO ELICIT COMMENTS AND TO ENCOURAGE DEBATE. THE VIEWS EXPRESSED IN IMF WORKING PAPERS ARE THOSE OF THE AUTHOR(S) AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE IMF, ITS EXECUTIVE BOARD, OR IMF MANAGEMENT.
CONTENTS PAGE
ABSTRACT …………………………………………………………………………………………………….. 2
I. INTRODUCTION …………………………………………………………………………………………. 3
II. LITERATURE REVIEW ……………………………………………………………………………….. 4
III. DATA OVERVIEW ……………………………………………………………………………………… 5
IV. EMPIRICAL METHODOLOGY …………………………………………………………………….. 7
V. ESTIMATION RESULTS ……………………………………………………………………………….. 8
VI. CONCLUSION ……………………………………………………………………………………………. 10
REFERENCES …………………………………………………………………………………………………. 12