A Risk Assessment for UK Investors in Guyana’s Emerging Energy Sector considering the outcome of the September 2025 Guyanese Elections
September 23, 2025 - Written by Martha Cheek
In 2015, ExxonMobil struck oil in the waters of a nation whose entire GDP was barely a quarter of its own annual profits. Guyana, home to just over 800,000 people, skyrocketed to the centre of global economic and geopolitical attention almost overnight. Excitement around the potential ‘new Qatar’ or ‘Dubai of the Caribbean’ is not a stretch: from a practically non-existent energy sector ten years ago, Guyana has become one of the largest oil producers per capita, with the highest expected oil production growth rate in the world (2022-2035). Following the ahead-of-schedule opening of the offshore Yellowtail development this year (August 2025), Guyana currently pumps over 900,000 barrels a day. Naturally, this has funnelled billions into the nation. Between 2022 and 2024, Guyana’s GDP growth rate hit an average of 47% – the highest in the world. A once overlooked state now looks like an investor’s dream.
For a small country long marked by a complicated history of colonisation, poverty, underdevelopment, ethnic tensions, corruption, and organised crime, the scale of this change can not be overstated – but not only for the good. The global interest – and pressure – which comes with the sudden discovery of oil opens up a Pandora’s box of risks. Chief among them is Venezuela’s claim to nearly two-thirds of Guyana’s territory, and the geopolitical tensions that simmer around it, particularly in terms of current US-Venezuela deteriorating tensions.
On Monday 1 September, Guyana went to the polls and elected incumbent president Irfaan Ali of the People’s Progressive Party/Civic (PPP/C) for a second term. At stake was the management of the burgeoning oil industry, including massive sums of foreign investment – and therefore the future of the country. This result provides the perfect opportunity for a review of the opportunities and risks of getting involved with Guyana’s emerging energy sector.
Context
Next May, Guyana will celebrate sixty years of independence from British rule. However, colonial legacies live on. For decades, it remained underdeveloped whilst its natural resources were siphoned abroad, leaving behind economic instability and high rates of poverty. Transnational organised crime continues to thrive: mainly drug and human trafficking and gold smuggling. Ethnic tensions between Afro-and Indo-Guyanese communities, themselves inherited from colonial policies, have further entrenched political instability and corruption. These tensions tend to come to the fore around elections – 2020 was a notable example.
Moreover, Guyana’s tiny population suffers from one of the worst cases of brain drain in the world: the vast majority of people do not advance beyond secondary education, and 89% of nationals with a university degree leave the country. Given that the oil industry is so new, the technical skills required are also scarce.
Against this backdrop, the oil discovery sets up the conditions for both promise and potential failure – like its troubled neighbour Venezuela. Chief among the risks are two familiar economic pathologies: Dutch disease – the dilapidation of other sectors of the economy after a resource boom – and the resource curse, when a mismanaged dependence on one single commodity fuels inflation, corruption and long-term instability.
This is why these elections were so crucial. Guyana may hold its second auction for offshore oil blocks in 2026, once seismic surveys are completed. Exxonmobil have relinquished part of their acreage as per their original contract, signed in 2018. The government of Guyana – at the time under David Granger of APNU (A Partnership for National Unity), traditional opposition to the PPP/C – initially agreed to a Production Sharing Agreement (PSA) that gave extremely favourable fiscal terms to Exxon as a means to kickstart production. As output surged during the PPP/C’s incumbent term, however, domestic pressure built on the government to renegotiate a fairer share of revenue, and avoid reproducing colonial-style dependencies on foreign capital and expertise. The PPC/C has revised the PSA for new blocks, but critics maintain that concessions are still overly generous to the oil giants. Unsurprisingly, all opposition parties were running on the promise to revisit the deal: resource governance has become the decisive fault line of Guyanese politics.
British soldiers marching in Georgetown, British Guiana, October 1953. Credits: https://www.gettyimages.ca/detail/news-photo/british-soldiers-marching-in-georgetown-british-guiana-news-photo/599304970
Analysis
Opportunities
What makes the opportunity to invest in Guyana so compelling is not just its growth, but the strategic foresight behind it. Irfaan Ali has demonstrated a strong commitment to building the domestic stability and infrastructure needed to encourage, make good use of, and guarantee returns for foreign investment. Billions have been invested yearly into the police force and anti-narcotics efforts, schools, massive transport construction projects, and healthcare. Specialised training policies for the energy industry have also been highly successful, with thousands of locals successfully finding jobs. These moves also hope to encourage more of the Guyanese diaspora to move back home and find a space in the newfound industry.
Guyana’s sovereign wealth fund (National Resource Fund or NRF, established 2019) is a key effort by the PPP/C to resist the resource curse and Dutch disease. It helps protect oil revenues from volatility in the domestic economy and currency value, and limits – and subjects to greater transparency – transfers of this revenue to the government. The PPC/C also resisted domestic pressures to retroactively alter oil contracts for a better share for itself, choosing to prioritise investor confidence. Its new PSA only applies to future contracts, and although terms are slightly less favourable than in its starter contracts, this should signal to investors that the industry is approaching a greater degree of maturity and stability. Furthermore, in order to stay competitive against the context of a decline in upstream oil investment in 2025, they passed a new Petroleum Activities Bill on 9 August. Finally, Europe is currently Guyanese oil’s biggest buyer. This demand is unlikely to dissipate as long as the Russia-Ukraine war continues, as sanctions continue to force those who were dependent on Russian oil to look elsewhere. Together, these factors foster a predictable and investor-friendly climate which suggests that long-term commitments will remain safe.
Risks
Domestic
There are concerns that government measures are too slow – or not enough – to mitigate the structural economic and logistical risks. For example, sovereign wealth funds find most of their success stories in countries like Norway which already had stronger infrastructure before their resource booms. Also, the lack of both skilled and unskilled Guyanese workers makes the availability of local labour and partnership opportunities a key concern for prospective investors. Timelines for roads and training programmes remain unclear, leaving worries that the country will be flooded with foreign workers, and vehicles without the physical means to get around.
There are many reports that the ordinary Guyanese citizen is not feeling the benefits of the massive GDP growth, even experiencing steep rises in the cost of living. In addition, there have been delays and overrun costs in investment projects and shortfalls in their outcomes. According to the World Bank, health indicators remain low (compared to regional averages), and poverty high. This is not necessarily paradoxical: benefits of a resource-driven boom do typically take time to trickle down to the rest of society.
However, investors should take into account the risks associated with growing civil dissatisfaction: pressure on the government to renegotiate contracts or other regulatory changes, strikes or even broader unrest. Equally, while courting the British media during his latest campaign, Irfaan Ali assured UK podcast The Rest is Politics that ethnic divisions only surface at election time. Various recent CIVICUS and Reporters without Borders reports concerning deteriorating press freedoms in Guyana during the incumbent term may make observers cast doubt on statements like these. Guyanese civil society may not be as harmonious as purported, and oil wealth could exacerbate this.
Closely related are the election results. Now that the population has put their confidence in Irfaan Ali for a second term, the pressure is on to deliver. Equally, powers are enhanced, and media freedoms and other transparency and corruption-related whistleblower reports should be taken seriously and looked into. On the other hand, he will not be able to run for a third-term, presenting a concrete risk that the PSA-renegotiation question will be back on the table in five years time. The 2020 electoral fraud scandal weakened APNU, but billionaire Azruddin Mohamed’s very new WIN (We Invest in Nationhood) party shook things up by coming in second. Mohamed has been sanctioned by the US, so his growing popularity and potential to be elected next may have huge ramifications for US(and UK)-Guyana private sector relations.
Climate change is also a huge cause for concern. There has, as always, been considerable resistance on environmental grounds to oil exploitation. A win for activists came in May this year with the passing of a bill which makes the companies involved in extraction liable for oil spill damages. Any potential investor should obviously be conscious of clauses such as this, as well as public pushback amid moves towards green transitions. The reality, however, is that these transitions are slow, and fossil fuels are still in high demand worldwide.
Irfaan Ali himself has staunchly defended oil extraction as the means precisely to kickstart the infrastructure necessary for said clean energy transition (the classic means-ends argument made by many Global South leaders). When challenged by the hosts of BBC’s HARDtalk, he maintained that Guyana has kept its rainforests pristine, and it is now their turn to develop – ex-colonial powers who began the process of burning coal and destroying the ozone layer two-hundred years ago have no leg to stand on. In other words, it is unlikely that environmental resistance will cause a drastic change in his policy or halting of extraction.
However, there is a greater risk associated with climate. Some predictions identify Georgetown, the capital where 90% of the population live, as underwater by 2030. Of course, the government would (and do) argue that oil revenue is necessary to resist this and build resilience for the future, however, it then becomes a race against nature. Investors should take seriously the potential for projects being forced to stop.
“The Prosperity Guyana”, a FPSO vessel at the offshore Payara field.
Geopolitical risk (& key players)
Venezuela’s claim to the Essequibo region, like many territorial disputes, is rooted in the (arbitrary) drawing of borders by colonial powers. Venezuela disputed the British-drawn Schomburgk Line (1841), culminating in an 1899 international arbitration tribunal which ruled overwhelmingly in favour of the British. Venezuela has maintained that the region is theirs in its rhetoric, evident in its maps and textbooks. However, the current dispute represents the most significant official claim on the international stage – it is no coincidence that it has materialised with renewed urgency since the huge oil discoveries raised the stakes. Venezuela has been flexing its muscles by attacking a Guyanese naval vessel and troops, holding a referendum, and electing a governor for the region, formally rejecting an International Court of Justice order not to do so.
There are also suspicions that Venezuela is attempting to provoke Guyana using criminal networks, namely the Cartel de los Soles. Guyana stated on 22 August that these networks are a threat to peace and security in the region, and affirmed its commitment to tackling it in collaboration with its bilateral partners. Guyana and Brazil have already launched joint military patrols against transnational crime and trafficking, and given that Venezuela’s threats also implicate Brazil’s northern border, this heightened cooperation and presence can act as a deterrent to Caracas on both fronts.
Venezuela’s friendships with China, Russia and Iran only deepen unease for the US, EU and UK, who have all expressed unwavering support for Guyanese sovereignty. Said support should thus be read not only in terms of longstanding economic partnerships, but of this ever-growing, underlying geopolitical battle between blocs, reified to a much greater extent under Trump’s second administration. Of course, the US’ stakes are particularly high, and Marco Rubio publicly warned that any attack on Guyana would be a ‘very bad week’ for Caracas.
China’s role is more nuanced. As a key economic partner to both Venezuela and Guyana, their purported political neutrality will be harder to maintain as these blocs coalesce and begin to make political demands. Irfaan Ali did exactly this at a celebratory event for China-Guayana diplomatic relations on 7 June, by expressing an expectation for support of Guyanese sovereignty over Essequibo: a rare direct political ask of China. Investors should keep their eye on how China navigates this position, particularly if the US continues to pressure Maduro militarily – or even attempt to oust him. How will China act if forced to choose?
Many experts agree that the chances of Venezuela actually invading Guyana is still very low. Current US gunboat diplomacy makes it even lower. However, to echo the words of Dr Feliciano de Sá Guimarães (Brazilian Centre of International Relations, CEBRI) in a discussion for the International Institute for Strategic Studies (IISS) in March, the mere fact that it is even a serious topic of discussion in academic and diplomatic circles shows just how much inter-state tensions in the Americas have deteriorated in recent years.
However, all of this is currently being overshadowed by the US military build-up in the Caribbean to combat ‘narcoterrorists’, peaking with the two strikes on Venezuelan vessels allegedly carrying drugs on 2 and 15 September, killing all eleven and three people on board respectively. Aside from some legal experts and human rights advocates, the international community has been slow to condemn this use of force without justification with regards to international humanitarian law. This growing culture of impunity on the global stage makes it more likely Trump will continue along this path, which breaks his usual pattern of bold, polemical statements with not much action behind them. In fact, he stated that “There’s more where that came from”, and on 14 September refused to rule out a potential strike on mainland Venezuela. If tensions do rapidly deteriorate further, there will obviously be huge ramifications for neighbouring countries. Guyana may choose or be pressured to allow an attack from their territory, or even deploy their own troops in a sort of quid-pro-quo for US support for its sovereignty. Maduro has promised to retaliate against Guyana and Trinidad if this happens, although it is unclear how much military prowess Venezuela actually has.
When considering this current situation, Venezuela’s claim on Essequibo begins to mushroom from a regional tension which seemed bound to remain merely rhetorical – and therefore fairly reasonable for more risk-friendly investors to discount – into a major geopolitical risk which should ring alarm bells for anyone. This episode cannot be seen in isolation: it sits on top of Washington-Beijing, Russia-Ukraine, and even the Middle East. As a UK investor, at least one would find themselves aligned with their own government’s position regarding US allyship – in this sense, it would not be completely reckless, and the US hardline on Venezuela may even secure more stability for potential UK entrances. However, anymore military activity in or around Venezuela and the Caribbean by the US, an extra-regional power with a history of military intervention in its ‘backyard’, will likely be condemned by other Latin American leaders, and all-in-all will not have a positive effect on long-term stability in the region.
Conclusion
Overall, both pre-existing and new domestic pressures and conditions, the climate, and broader geopolitical environment all carry risks which complicate those initially attractive statistics on Guyana’s growing oil sector.
For now, it is highly unlikely that this government will unilaterally alter contracts and jeopardise those current and future investments which are so crucial to maintaining momentum. In any case, entering into such an investment would demand robust arbitration clauses, therefore it obviously depends ultimately on how risk-tolerant each potential investor is. Like always, success will hinge on awareness and timing. For example, despite poverty remaining high in Guyana, progress in education was described by the World Bank as “remarkable”, which may point investors on the more risk-adverse side towards a more long-term project to keep watch on.
Venezuela’s claim to Guyana’s land will most likely not materialise, but growing tensions between Maduro and Trump have taken centre stage: potential investors making any moves in the region should take these international stakes seriously. That is not to say it should not be done, but the situation has changed so quickly in the last few weeks – and even days – that assessing timing and long-term prospects are even more important than before.
Written by Martha Cheek
Analyst on the LATAM & Caribbean Research Desk