Caribbean Energy Transition Gains Momentum as Guyana Oil Production Passes 350,000 Barrels Per Day and Renewables Investment Surges

Publication Date: 3 September 2023  |  Coverage Period: 3 August – 2 September 2023

Morning Briefing

• Guyana’s oil production surpassed 350,000 barrels per day in August 2023 as the ExxonMobil-operated Prosperity FPSO ramped to full capacity on the Stabroek Block, driving GDP growth projections that the IMF has revised upward to among the highest of any country globally for 2023.
• Barbados Prime Minister Mia Mottley continues to champion the Bridgetown Initiative at global climate finance forums, with the proposal gaining traction among G20 development finance institutions as a framework for unlocking concessional capital for small island states facing climate-driven economic risk.
• The Caribbean Development Bank approved a package of green energy financing instruments in August 2023 totalling approximately US$120 million, supporting solar and wind energy projects across six member countries and accelerating the region’s transition away from diesel-powered electricity generation.
• Trinidad and Tobago’s Atlantic LNG facility maintained steady operations through August, with the country’s four-train LNG export complex continuing to supply European and Asian markets and generating foreign exchange revenues that underpin the T&T economy.
• Jamaica’s Jamaica Public Service Company progressed its renewable energy integration programme, with solar capacity additions under the new Independent Power Producer framework expected to reduce the island’s dependence on imported fossil fuel for electricity generation.
• IRENA’s 2023 Caribbean renewable energy assessment confirmed that the region has the solar irradiance and wind resource to generate over 100 percent of its electricity needs from renewable sources, with financing and grid integration remaining the primary barriers to realising this potential.

Guyana Oil: The Stabroek Block and Its Economic Transformation of the Region

August 2023 marked another milestone in Guyana’s extraordinary oil production ascent as output from the ExxonMobil, Hess and CNOOC-operated Stabroek Block surpassed 350,000 barrels per day. The achievement reflects the successful ramp-up of the Prosperity FPSO — Floating Production Storage and Offloading vessel — which joined the earlier Liza Destiny and Liza Unity FPSOs in extracting oil from one of the largest offshore oil discoveries made anywhere in the world in the past decade.

The economic transformation that this production level is delivering to Guyana is without modern precedent in the Caribbean region. A country of approximately 800,000 people, with a GDP that barely registered on regional economic comparisons just a decade ago, is now projected by the International Monetary Fund to achieve GDP growth exceeding 30 percent for 2023 — the highest growth rate of any country in the Western Hemisphere and among the highest in the world. Per capita income metrics that would have placed Guyana firmly among the lower-middle income nations are being rapidly revised upward as oil revenues flow through the economy.

The Guyanese government’s management of the oil windfall through the Natural Resource Fund — a sovereign wealth vehicle established to ensure that oil revenues are not wholly consumed in the current period but are preserved for future generations and invested in long-term development — is being watched closely by development economists and regional institutions. The challenge of ‘resource curse’ dynamics, where sudden commodity wealth creates Dutch Disease effects, inflation, governance challenges and inequality, is very much on the minds of Guyanese policymakers and their advisors. Early signs suggest a degree of institutional discipline, though the pressures on the government to translate oil wealth into visible public goods — infrastructure, healthcare, education and housing — are intense.

For the Caribbean property market, Guyana’s oil economy creates both direct and indirect investment opportunities. Directly, Georgetown’s commercial and premium residential property markets are among the most dynamic in the entire Caribbean, with office rents, residential sale prices and prime residential rental rates all rising at double-digit annual rates as the oil economy pulls in expatriate workers, regional professionals and international service companies. Indirectly, Guyana’s growing wealth is beginning to flow into regional investment — with Guyanese investors acquiring hotel and commercial properties in Jamaica, Barbados and Trinidad as they seek to diversify their holdings beyond a single oil-dependent domestic market.

The Bridgetown Initiative: Barbados’s Case for Caribbean Climate Finance

While Guyana is reshaping the Caribbean’s energy profile through fossil fuel production, Barbados Prime Minister Mia Mottley is simultaneously working to reshape the global climate finance architecture through the Bridgetown Initiative — a proposal that has gained remarkable international traction since its launch in 2022. The Initiative calls for a fundamental restructuring of how multilateral development banks and international financial institutions provide financing to small island developing states facing the dual challenge of climate adaptation and sustainable development financing.

The core argument of the Bridgetown Initiative is that the current international financial architecture is structurally inadequate to the challenge of climate finance for vulnerable small island states. Caribbean countries face sovereign borrowing costs that reflect their perceived credit risk as small, commodity-dependent economies, yet their actual carbon footprint and contribution to global climate change is negligible. The Initiative proposes that this misalignment be corrected through concessional financing mechanisms that provide Caribbean and other SIDS with access to capital at rates appropriate to the climate adaptation investments they need to make, rather than the commercial rates that current sovereign credit assessments impose.

For Caribbean property markets, the Bridgetown Initiative’s success would have material practical implications. Climate adaptation investment — sea walls, mangrove restoration, building code upgrades, stormwater management infrastructure — directly reduces the physical risk of Caribbean coastal and lowland property. Financing for energy transition investment — renewable electricity generation, energy storage, grid modernisation — would reduce the energy cost burden on Caribbean businesses and households, improving the economics of property ownership and operation across the region. The Initiative is not merely a matter of international development finance architecture; its outcomes would be felt at the level of individual property investment decisions.

Caribbean Renewable Energy: The Transition Accelerates

The Caribbean’s transition away from expensive, imported fossil fuel electricity generation toward domestic renewable resources is accelerating across the region, driven by a combination of high global oil and LNG prices that have made Caribbean electricity among the most expensive in the world, improving renewable technology economics, and access to climate finance from multilateral development banks including the Caribbean Development Bank, the Inter-American Development Bank, and the Green Climate Fund.

The Caribbean Development Bank’s August 2023 approval of US$120 million in green energy financing reflects the institution’s growing commitment to accelerating the energy transition in member countries. The package supports a mix of utility-scale solar, distributed rooftop solar, wind energy and battery storage projects across six member countries. At the country level, progress is uneven: Barbados, which has set an ambitious 100 percent renewable electricity target for 2030, has made more measurable progress in expanding distributed solar generation than most of its neighbours; Jamaica is advancing its Independent Power Producer framework to bring new utility-scale solar capacity onto the grid; and several smaller OECS states have benefited from regional energy framework financing to develop small-scale renewable energy projects.

IRENA’s 2023 Caribbean renewable energy assessment provided an important benchmark for the region’s energy transition potential and progress. The report confirmed that the Caribbean’s solar irradiance — the intensity of solar radiation available for photovoltaic generation — is among the highest in the world, and that the region’s wind resources are also significant, particularly in the Eastern Caribbean where trade winds provide consistent generation capacity. The primary barriers to realising this renewable potential are not technical or resource-related but financial and institutional: the cost of capital for energy infrastructure investment in small island states is high, grid integration of variable renewable generation requires technical capacity and investment that many Caribbean utilities lack, and regulatory frameworks for private sector renewable investment remain nascent in several jurisdictions.

Trinidad and Tobago LNG: A Bridge Fuel and an Asset

Trinidad and Tobago’s position in the Caribbean energy landscape is uniquely complex. On one hand, the country operates the Caribbean’s largest conventional energy complex, with Atlantic LNG’s four-train liquefaction facility producing approximately 15 million tonnes per annum of LNG that is exported to markets in Europe, North America and Asia. On the other hand, T&T is also committed to the Paris Agreement framework and to its own renewable energy transition, though the timeline and pathway for diversification from LNG exports is less clearly defined than the ambitions articulated by some of its smaller Caribbean neighbours.

The current global energy market context is, paradoxically, positive for T&T’s LNG operations. European demand for LNG as a substitute for Russian pipeline gas — a consequence of the disruptions to European energy markets following Russia’s 2022 invasion of Ukraine — has sustained global LNG demand and price levels that benefit Atlantic LNG’s production economics. Trinidad’s LNG revenues continue to flow into government coffers, supporting the fiscal position and enabling the public investment — including in housing and infrastructure — that underpins the commercial property market in Port of Spain and the broader T&T economy.

For property investors tracking Trinidad and Tobago, the energy sector’s sustained profitability provides a fundamental economic backstop. Port of Spain’s commercial office market, its retail property sector and its prime residential market all reflect the wealth generated by an energy economy that is, at current gas prices, performing strongly. The HDC’s social housing programme, funded in significant part by energy revenues channelled through the Treasury, provides the affordable housing supply that partially addresses T&T’s housing affordability challenge.

Caribbean Leaders This Month

Guyana leads this month as oil production passes 350,000 barrels per day and GDP growth projections climb to levels without modern parallel in the Caribbean. Georgetown’s property market continues to reflect the extraordinary wealth dynamics of an oil economy in full expansion mode, with commercial and premium residential values appreciating at rates that are reshaping regional investment benchmarks.

Barbados maintains its leadership position in the Caribbean climate finance conversation through Prime Minister Mottley’s Bridgetown Initiative, which is gaining real traction in international development finance forums and could deliver concessional capital that transforms Caribbean climate adaptation investment economics.

Trinidad and Tobago benefits from sustained LNG revenue flows at a time when global gas demand remains elevated, providing the fiscal foundation for public investment in housing, infrastructure and social services that underpins T&T’s property market fundamentals.

Jamaica advanced its renewable energy transition agenda through the Independent Power Producer framework, with new solar capacity additions expected to reduce the island’s electricity cost burden and improve the economics of property ownership and operation for households and businesses alike.

Dominican Republic continued to attract energy sector investment alongside its dominant tourism-driven property market, with the country’s size and economic diversity providing resilience to global commodity price swings that more energy-dependent Caribbean economies cannot match.

St Lucia progressed its renewable energy framework, with the country’s Citizenship by Investment programme revenues providing some fiscal space for public infrastructure investment including energy transition projects.

Grenada benefited from CDB green energy financing to advance its national renewable energy programme, reducing imported fuel dependency and improving the island’s long-term energy cost competitiveness as a tourism destination.

Antigua and Barbuda progressed its solar energy expansion programme, with the government’s commitment to reducing electricity costs through renewable generation supporting the broader economic competitiveness of the island as a tourism and investment destination. Overall August regional performer: Guyana, for oil production milestones that are delivering economic transformation at a pace and scale that the Caribbean has never previously experienced.

Looking Ahead

September marks the statistical peak of the Atlantic hurricane season, and Caribbean energy infrastructure — like property more broadly — will be monitored carefully through the final active weeks of the season. Guyana’s offshore oil infrastructure, including the three FPSOs operating on the Stabroek Block, is designed to withstand tropical weather events and can be disconnected from subsea infrastructure and moved to safety if conditions require, but any disruption to production would have immediate economic consequences given the centrality of oil revenues to the Guyanese economy.

The Caribbean Development Bank’s September board meeting will be watched for additional announcements on green energy and climate adaptation financing, with the institution’s evolving approach to blended finance — combining concessional public capital with private investment to reduce the effective cost of renewable energy project financing — likely to be a focal point. The CDB’s capacity to mobilise private sector co-financing alongside its own balance sheet resources is increasingly seen as the key to scaling the energy transition investment that the region needs.

For property investors, the energy transition’s implications extend beyond electricity costs. As Caribbean governments invest in renewable energy infrastructure, the communities around energy transition projects — solar farm sites, wind turbine corridors, battery storage facilities — can see property market effects both positive (employment, construction activity) and negative (land use constraints, visual impact). Understanding the specific geography of planned energy infrastructure is becoming an increasingly relevant element of Caribbean property investment due diligence.

The Caribbean Property & Investment Review is published monthly and covers developments during the preceding calendar month. All factual statements reflect information publicly available at the time of publication.

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