Preparing for an oil bonanza

Roderick Raindford, Contributor

Recent reports, though somewhat tentative in tone, have raised hopes of oil being found in commercial quantities offshore Jamaica. However, while the prospect of a major oil strike would generate understandable euphoria, we should be aware that, unless handled wisely, it could turn out to be as much a curse as a blessing.

Accordingly, we should not wait until an oil bonanza is literally on top of us before attempting to define policies and strategies for dealing with it. That way lies the likelihood of costly errors and missteps. It is therefore important that adequate forward planning be undertaken for the management of any substantial oil deposits that may be located within Jamaican jurisdiction, once a high probability emerges that such a find is in the offing.

There would be at least three dimensions to such forward planning. The first would concern preparations for negotiating the framework for exploiting the resource. Capital, technology, and expertise would have to be mobilised for the purpose, and the solemn responsibility of ensuring optimal returns to our national community would rest on the shoulders of the Jamaican authorities.

A second matter for timely forward planning would be the deployment of that portion of the results that accrues to Jamaica. There would be a challenge to control the natural urge to indulge in populist extravaganza. Here I cannot help but recall an insightful observation some years ago by the late Caribbean icon, William Demas, that adjusting to a resource windfall can be as challenging as adjusting to a paucity of resources.

It would be essential to guard against the risk of 'Dutch Disease', in which a strong surge in foreign earnings from a booming sector could have the effect of weakening other sectors, rendering them uncompetitive at home and abroad. This would be a poor legacy to leave to future generations out of an oil bonanza, especially in the context of a wasting resource, which would eventually be depleted.

Alertness needed

We would also need to be alert to the urgent imperative of protecting the environment in any arrangement to exploit a major oil strike. In particular, we should be mindful, among other environmental concerns, that it is quite possible that the recent Deep Sea Horizon platform disaster could be replicated in shallower formations.

In today's world, it should be possible to prepare thoroughly for all of these three dimensions. For one thing, we have available to us decades of both positive and negative experiences globally on which to draw to inform our approach. For another, it should be possible to mobilise expertise sensitive to our national interest to help marshal and analyse the relevant technical information and develop proposals for national policy. Such expertise can surely be found within the Caribbean and the Caribbean diaspora, and through appropriate multilateral agencies.

Good governance

It would also be of particular importance, as an expression of good governance, to proceed transparently and with adequate public consultation. Here, of course, the right balance would have to be found between confidentiality in the conduct of negotiations with prospective partners, on the one hand, and the flow of information to the public, on the other.

In this connection, the authorities should consider publishing a green paper on the key issues for public comment and for debate in Parliament, before finalising the policy and governing arrangements for the exploitation of an oil bonanza.

Roderick Rainford is a former CARICOM secretary general. Feedback may be sent to columns@gleanerjm.com