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Illustration: Sarah Grillo/Axios

On the coast of South America, just north of Brazil, lies the impoverished former British colony of Guyana, distantly remembered for a bizarre mass suicide four decades ago that begot the term "drinking the Kool-Aid."

Why it matters: The discovery of a massive trove of oil off its shores, including two finds just this week, puts Guyana on the cusp of becoming one of the world's wealthiest nations, in the league of petro-states like Qatar.

What's worrying the experts:

  • Guyana seems wholly unprepared for the avalanche of cash coming its way. It's in political turmoil, with no plan in place for how to marshal and distribute the money among a population of just 780,000 people.
  • The exploration and production deal, with ExxonMobil, is one of the most one-sided in frontier oil, heavily favoring the company. That makes Guyana rife for future political discontent and local demands for renegotiation.

"There is no way the explosion of money will be managed properly," says Amy Myers Jaffe, director of energy security at the Council on Foreign Relations. "Here you take this poverty-stricken country and make them Qatar in three years."

What's happening: Since 2016, Exxon has made a dozen discoveries in Guyana that now total more than 5 billion barrels of recoverable reserves. This is enormous — for perspective, the industry calls a 1-billion-barrel field a "supergiant."

Exxon did not respond to requests for comment. But it plans to begin producing 120,000 barrels a day next year, and to bump that up six times to 750,000 by 2025.

  • At $60 a barrel, and a roughly 50-50 split of profits with Exxon, Guyana could receive a bonanza of more than $5 billion a year in revenue.
  • Given how fast energy is changing and an industry-wide push to pull as much oil out of the ground as possible as fast as possible, experts think the company is likely to push production to 1 million barrels a day.
  • At that production or larger, Guyana could receive $10 billion a year: "The big picture is getting bigger," Riyad Insanally, the Guyanese ambassador to the U.S., tells Axios.
"It's the most recent but rare incident of a brand new petrostate out of nothing."
— Bob McNally, president of the Rapidan Energy Group.

But with all that cash on the horizon, Guyana has barely gotten organized for what, in other countries, has triggered a free-for-all of chaos, corruption and war.

  • The country has been in political turmoil since last year. In December, the Parliament ousted the government of President David Granger in a vote of no confidence. That set in motion new elections within 90 days, but the government is challenging the move in court.
  • No plan has been devised for how to begin to build and upgrade the country's roads, communications, and institutions. Neither is there a plan for building up the capital of Georgetown.
  • No one has determined how to both husband the wealth, and to share it.

Guyana is an enormous triumph for Exxon, which has been battered by the loss of world-class assets in the post-Crimea U.S. brinkmanship with Russia. Its share price is down 16% over the last year, amid questions whether it can still deliver industry-leading profit through thick and thin, as it once did.

  • Guyana, and the super-fast delivery of production by next year, shows that the company still has what it takes.

The bottom line: For Guyana itself, there is less certainty. Insanally said the reaction in Guyana runs the gamut: "There are people who are excited, people who are apprehensive, and people who think oil should be avoided as a curse altogether."

Go deeper

Updated 8 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Pfizer and Moderna boosters overwhelmingly prevent Omicron hospitalizations, CDC finds — Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: The case for Operation Warp Speed 2.0 — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies — Federal judge blocks Biden's vaccine mandate for federal workers.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker

Arizona governor sues Biden administration over COVID funds tied to mandates

A teacher prepares a hallway barrier to help students maintain social distancing at John B. Wright Elementary School in Tucson, Arizona, on Aug. 14, 2020. Photo: Cheney Orr/Bloomberg via Getty Images

Arizona Gov. Doug Ducey (R) filed a lawsuit Friday against the Biden administration for ordering the state to stop allocating federal COVID relief funds to schools that don't comply with public health recommendations such as masking, the Arizona Republic reports.

Why it matters: The Treasury Department said last week that the state would have to pay back the money if Ducey does not redesignate the $173 million programs to ensure they don't "undermine efforts to stop the spread of COVID-19."

Federal judge blocks Biden's vaccine mandate for federal workers

President Biden speaking from Eisenhower Executive Office Building on Jan. 21. Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

A federal judge in Texas blocked the Biden administration from enforcing its coronavirus vaccine mandate for federal workers on Friday, citing the outcome of last week's Supreme Court ruling that nullified the administration's vaccine-or-test requirement for large employers.

Why it matters: It's a blow to President Biden's efforts to increase the U.S.' vaccination rates, though much of the federal workforce has already been vaccinated against the virus.