Rare Birds Podcast Series 2/3 Guyana Startup Nation

Rare Birds Podcast 192 - Guyana Startup Nation Part 2 of 3

[Bonus Series] Guyana Startup Nation. A Three Part Series with Entrepreneur, Guyana Focused Frontier Merchant Banker and Asset Manager Steven Jasmin. Part 2 The Guyana Story Episode 192

EPISODE HIGHLIGHTS

*Find a written transcription of the interview below

Part II Guyana Story

• Historical, Cultural and Social Guyana
• Caricom’s Role in Guyana
• The Guyanese Economy
• Seeing Guyana Through an Investment Lens
• Understanding Politics and Its’ Role in the Country
• Discovering Oil in Guyana
• The Type of Crude Discovered
• Current Atmosphere and Attitudes towards Oil
• Government Preparation Post Discovery
• Guyana’s Blank Canvas
• Responding to the Risks Associated with Investing in Guyana
• Dubai’s Investment in Guyana
• Discussing Comps for the Guyana Story

You can also listen in via Anchor, Overcast, Radio Public,  Soundcloud, itunes, Stitcher, and Spotify

Host: Jo-Ann A. Hamilton

• LinkedIn: https://www.linkedin.com/in/jo-annalexandra/
• Twitter: https://twitter.com/JAlexandrHamil

Guest:  Steven Jasmin

• LinkedIn:  https://www.linkedin.com/in/smjasmin/
• Twitter:   https://twitter.com/smjasmin
• Medium: https://theguyanabanker.medium.com/

Resources Mentioned:

• N/A

Credits:

• Produced and Hosted by-Jo-Ann A. Hamilton
• Music by Notes to the Soul

Full Interview Transcript:

Rare Bird Podcast Part II The Guyana Story

Jo-Ann Hamilton

Greetings everyone and welcome to this special bonus series of the rare birds emerging markets podcast with me, your host Jo-Ann Hamilton. This special bonus series is an exploration into the frontier market country of Guyana. It is an exploration driven by curiosity so that together we can learn more about the various emerging and frontier markets across the globe as well as the individuals on the ground driving the action. So why Guyana if you type guiding Google, you may be surprised by what you on earth, more than likely a series of articles about or related to the country's discovery of oil in 2015. This has subsequently led to an influx of new investments in different sectors across the country. In this three part series, you will hear me in conversation with entrepreneur and Guyana focus merchant banker and asset manager Steven Jasmin. This series is titled Guyana, startup nation, it consists of three parts: Part 1, the origin story, part 2, the Guyana story, and lastly, part 3, startup nation. Crucially important, this series like all the rare birds series are for informational purposes only. Nothing new here in this series gets investment advice of any kind, as always excited to share this content with you so let's get to it. Bye for now.

Welcome back to part 2; The Guyana story. In this episode you'll be given historical cultural and social context about the country. You'll hear about the role of CARICOM and the Guinee economy. You'll get to see Guyana through an investment lens. You'll hear about when oil was discovered. The type of oil that was discovered, as well as the current atmosphere and attitude towards oil. You'll also hear why Steven believes that Guyana has a blank canvas from which to build. Listen in to another fascinating conversation. Bye for now.

So Steven, you landed in Guyana. What are your first impressions when you get to Guyana?

Steven Jasmin

So I had been on a trip island hopping my way down through the Caribbean, you know started out in St. Kitts and Nevis hit Jamaica hits Martinique and then ended up coming down and stopping at Trinidad on the way in and then landed in Guyana in June of 2017. And was fortunate enough I met some great people on my first trip in and they helped introduce me around and brought me into some different rooms and with that, you know I just fell in love with the country and I just saw opportunity everywhere and I was fortunate along the way growing up, I look to history I've been, I love to study financial services history, banking history. I've read a lot of biographies over the years of all the major bankers and one of the common themes and trends I've always seen is that there's two ways to truly create wealth for yourself and for your partners and it's, investing in war, and or investing in development of frontier markets. And so, with that, I had my friend's father who ended up going over Moscow when the wall fell down and opened one of the one of the first western solid commercial real estate firms there and watching how he built his practice and what he did and how he ended up in a span of 10 years after the wall fell down, building a billion dollar real estate portfolio. I thought that Guyana was going to need that same help. And then also combined with my background in the oilfield services sector, I thought I saw a lot opportunity there for some of my partners in the states and as well as just knowing all the understanding what the needs of the country were going to be my oil and gas background. And quite frankly, it was just it was a beautiful country that is a riverboat Town Country of Guyana is a small country, it's only 100,000 people, and 95% of the population lives within three miles of a river or an ocean. And so with the predominantly most everyone living in and around the capital of the country, Georgetown and so, through that process, I just kind of felt at home because of the climate and the temperatures are very similar to Louisiana where you've got the offshore industry, but you also have the mouth of the Mississippi River right there. And the brown water and so I love river towns and I've always loved the water and just said, Hey, I think I can make this work. This seems to be there's something here and so it was surreal and I fell in love with the people. I mean, they're welcoming. They're warm, and they're interesting, Guyana is a country of 800,000 people and it's one of the places it's one of the only places on Earth, where Hindus, Muslims and Christians all coexist peacefully and there really isn't any major religious strife to speak up. And so with that, it's been exciting and interesting, but it was just, it just felt right. It felt like I was home when I first landed there and kind of was eager and no, candidly, it was the first time I'd ever been on the continent of South America. And so, this has also been kind of my first introduction to South America, but it was the biggest reason why I stayed was I saw the opportunity, but it was also an English speaking country. And I just, I felt safe and I felt comfortable and all those factors said hey, there's something here and just follow my gut that serves it served me well over my career so far, as we talked about, and, it was what just felt right.

Jo-Ann Hamilton

Yeah, absolutely. And, in this part of our series, we're going to really take a deep dive into Guyana so for those listening, and they don't know because a lot of people don't know Guyana, Steven. We talked about Guyana at work meeting from the Caribbean. It's like all of us know, Guyana. Guyana is a South American country. I let you talk about Steven. Tell the audience about Guyana, like in sort of where it's positioned a little bit about its political economic history, just to give people a feeling about where we're talking about.

Steven Jasmin

Yeah, so Guyana is the only English speaking country in South America. It's a former British colony. 55 years ago, it gained its independence from the crown. And it's a country of two major populations, if you will ethnic populations. There's the Indo Guyanese and the afro Guyanese. And then there's also the indigenous Guyanese, which are more out of the Amazonian rainforest, because Guyana being on the top of South America to the west is Venezuela to the south is Brazil and to the east. The East is certainly are Dutch Guyana. So you know back from colonial exploration in colonial days at the top of South America, you had Venezuela, we had British Guyana, the Dutch Guyana and then you got French Guiana, and then Brazil wraps them all and it goes down all the way to the bottom of the continent. And so with that, British Guyana is uniquely positioned to really kind of influence the whole hemisphere. And quite frankly, Guyana is considered considers itself more accurately, a Caribbean nation and not a South American or Latin American country despite being on the continent of South America. Guyana is for some of your listeners who don't know, there's a Caribbean organization called CARICOM, I liken it to a mini version of the European Union. And with that, the CARICOM Secretariat, or the head of CARICOM, is actually headquartered in Guyana. And so, historically before oil and over the past 55 years or 50 years part of the discovery of oil, large scale oil, offshore, Guyana has been an agro processing center, not processing but an agriculture export driven economy. Timber has been a big export, minerals and mining arm to export so both on the Bauxite and gold are two large industries. But historically before oil, Guyana was one of the poorest countries in South America and Central America and the Caribbean. So not only because it's because of where it's positioned at the top of the coast of South America, Guyana doesn't have the beautiful white sandy beaches that the rest of the premium has. So there are not a lot of beach tourism opportunities, historically and presently. And frankly it being such a poor country, they've and the price of energy is a major factor like all South American and Latin American and Caribbean countries. And so, with that, they haven't been able to develop the value out of manufacturing to really get it to its next phase of development. And that's one of the beautiful things about this big oil discovery is now Guyana is going to be able to become, what I believe over the next 10 years will be the Singapore or Dubai or Hong Kong, from a place in history standpoint, as the financial center of South America, the Caribbean and Central America. Let me stop there and kind of see how, see what your thoughts are.

Jo-Ann Hamilton

Yeah definitely. I was going to tell you that. Guyana is known as the land of six peoples, very similar to like in Jamaica. Jamaica is every country has like its own national motto to make us out of many one people. But this that's very carefully and because the Caribbean is such a mix, but I think in Guyana, the six peoples are the Chinese, the Africans, the East Indians, the Portuguese, the Amerindians and the Europeans. So it's all of those people in Guyana, but like you said the majority are of African and Indian descent, but Ghana is very diverse. Like just as much as Trinidad and Jamaica as well. So yeah, Guyana, Trinidad and Jamaica have played a big role in the establishment of CARICOM. So Guyana is quite a leader within like the CARICOM community, but like you said, within a South American context, completely different, like they're the only English speaking country on the continent. And I think if you speak to people from South America, when you mentioned Guyana, it's kind of like, ooh Guyana. Like nobody really knows about Guyana, even within South America, you understand what I mean?

Steven Jasmin

Yeah, and I had no idea about that when I first got in there. And so this is, one of the and I have not spent any time really to speak of within Latin America, but Central America and South America. And so I, like everyone else assume that Guyana was a Spanish speaking country and had all kinds of inroads and from a banking standpoint, you would assume that they had drafted off some of Venezuela's success over the years, and there would be a lot more there, and that it would be very plugged in to the rest of South America. But the reality is that there are literally no connections in an island country in that regard. Everything has to be imported. And there's a lot of struggles and there's a lot of opportunities but it's a massive country to it’s a country of about 86,000 square miles. And as its landmass it’s got a large portion of the Amazon rainforest to the south, there are big savannas; it's got a huge country. And so, with that, there is some Brazilian influence especially down on the border and let them and there's a lot there's some in Venezuelan influence as well, obviously, with some of the immigrants that have come across, especially in like gold mining sectors. There's a lot but ultimately, it's more about an island nation. And that's part of the unique opportunity that you only realize when you spend four years in the country. But you're right; it is this is a country of many different peoples. And it's interesting to see that entire different Heritage’s kind of meld together. And I’ve referenced a little bit on the religion side, but it’s a very tribalistic country and both within the different ethnic groups and even subsets amongst those ethnic groups. I mean because there are two different kinds of branches of the Islamic faith in the country that's represented, and then there are obviously many different Christian faiths that are represented. And so, with that it's a lot of it's almost like a lot of micro countries within a big country. and each of those different constituents has their own political beefs their political views. And together, you form two major governments there's a coalition government and the Indo Guyanese PPP administration. And so it all kind of comes up to the top together into one but it's not just a binary A B type country that you're used to seeing in a lot of these frontier markets.

Jo-Ann Hamilton

Yeah, Guyana. I when I tried to explain Guyana from I guess, like a cultural perspective to people I say it's very similar to Belize. I don't know if you're familiar with Belize. Belize is also a unique country in Central America. It's a Caribbean country in Central America and they speak English. I mean, they also speak Spanish, but it's, it's very similar to Guyana in that sense of, it's kind of like an outlier in the region, because it's a CARICOM country as well.

Steven Jasmin

Absolutely. And I've not been to Belize, but along the way, I have a good friend that base there and a retired military man and out of London and he's been a friend and a mentor. And part of why he's doing so well in Guyana and having the success he's having is because he comes out of Belize and understands those cultural dynamics.

Jo-Ann Hamilton

Yeah, definitely. So looking into Guyana, from an investment perspective, tell, can you give us sort of like an overview, I know you mentioned it in part one of this series. So if we wanted to invest in Guyana, what are the things those we should know? What are the things that we should understand about this country? g

Steven Jasmin

The country profile ultimately, it's a wonderful country. It's very similar. I mean, your focus was on emerging and frontier markets. And so you've got a lot of background and experience without it, which is why I was excited, the chance to earn the privilege to work with you on this. But with that it's the same challenges you face everywhere. There's a lot of bureaucracy, being a former British colony, they like the red tape. there's a lot of politics involved. Obviously, it's a very politically interesting country, if you will. It's a very young country in the grand scheme of things. it's only 55 years old, since it's gotten its independence and all of South America, including Guyana has faced a lot of, been a geopolitical pawn globally over the past 30 years during the Cold War and things like that. And, Guyana was very much in the, in the middle of all that from its founding days. And that's part of some of the opportunities and the market, the operating environment that you’re walking into truly understands a country you have to understand its history. And I'm not going to say I'm an expert on Guyana's history but being there and being on the ground, you really just do the colloquialisms and some of the sayings and some of the all the articles and just learning things along the way as you kind of get to learn and understand the country over the four years like I've done, you really start to understand some of its history to be able to be successful in the future or the forward looking operating environment. You have to, understand where it came from the origin story, if you will, because that origin story is what influences the culture and the mindset, and the people and how they're their experience. people only know what they know. We talked a little bit about this in the previous episode. what they don't know and myself included, ended up it becomes blind spots. And so with that, there are the typical blind spots or the typical frustrations or front operating in a frontier market, originally took me two months almost to set up my first commercial bank account. But then this day and age, it still takes a month goes COVID here in the States, they'll come back down. So, but with that, that's just there's a lot of under development across the board, historically there's not been enough to go around and Guyana and so it's very competitive. It's very, if there's not enough going around, everyone's fighting for what little bit they can, and that, people don't realize how much that becomes an underpinning psychological mindset. And so, even when you get to these frontier markets, there's usually 10 to 15 groups or families that are kind of running the country and control, some of the key industries on the key parts of the ecosystem, if you will, because all a country is an ecosystem. And with that, it's very competitive and that was one of the first things I learned was that, everyone's used to building walls around themselves because there's not enough to go around. And so the, the theory of working together and collaboration, and the common good and the there's more than enough for everyone is just, it's exactly opposite of what their mindsets been. There's never been enough to go around. Like if you're sitting at someone else's table, literally eating, you're taking food off their table, if you're getting into business with someone else. Culturally, they get very jealous because they think that that's taking away from them and their opportunity and so, this I learned that very quickly and it helped position me to know not to be more of a Switzerland and work with everyone and myself with any one particular group or family, because I realized very quickly, it's a very tribalistic mentality, and that's a good thing. I mean, because it's, it's been needed it's been required because historically there hasn't been enough to go around and, and they've needed to develop that mindset and that and that way of doing business, and I look at it a lot of people look at that and say it's a challenge. I look at it and say it’s a blessing, because when you when you have that mindset, people want to work harder. They want they're more competitive, they want to push because they're afraid. They're afraid of the scarcity. They’re afraid that there's not enough to go around. Guyana has had some very rough periods and it's 55 years as it's been growing up, because they haven't had they've been one of the poorest countries that just further exasperate the lack of development around corporate governance around legislative laws. The Corporations Act in Guyana is still very underdeveloped and needs to be reworked and they're, they're working on it. And they will, but it's not as developed as in America. There's a reason 99.9% of any venture back startup company works with and is based in domiciles. Its organization if you will, out of Delaware because Delaware has positioned itself as the reading jurisdiction with the most case law and the most understanding of how to handle problems and challenges as you grow businesses with investors and partners and all that stuff. And that's something Guyana doesn't have and so that's these are areas that really need to be enhanced and reworked and re tooled. And it takes money to do that. And so historically, they haven't had the money to do it so it hasn't happened. And it's part of what's one of the many things that causes that self-fulfilling downward spiral, if you will, historically. That Guyana has faced and so now with the discovery of the oil and the wealth that's coming very quickly, and with technology, with technology now, all this stuff will kind of be worked out and re-tool, but as a new investor coming into the country, it's something to keep in mind and it’s we work as bankers to structure our transactions in certain ways with our lawyers and accountants and advisers and all the various people I like to write checks to. To help us on this journey, do it properly, to help make it as safe as possible and to de risk the investment on the financial side. These are some of the things you have to take into consideration.

Jo-Ann Hamilton

Yeah, and I think that, one of the things I say in the intro for this podcast is that emerging markets, frontier markets, we had to call them all together, but at the same time, there's more similarities than differences. And I think one of operating in the turkeys and I think one of the similarities that run through is the politics. You got to understand the problem. You can't separate politics from everything else when you operate in these countries. It just doesn't work that way. Like I guess, in the US or in, more developed countries, you can. But if you're in Africa and the Caribbean and Latin America release, politics is just it's all intertwined. You know. So, like you were saying earlier about, trying to be sophisticated and, and walk that line to know not to you don't want to align yourself with one group or another group, like, that's all a part of it like it's really a game that you have to play really, really well to be successful.

Steven Jasmin

And it's something you learn and you can only learn by being on the ground and working in the operating environment. And to your point, with my background, in technology and venture capital and experience, dealing with startups, which as we talked about, I believe Guyana as a startup nation, it's facing a lot of those same challenges and the same issues and but with my experience and my abilities, I know how to mitigate that and navigate that. And that's part of what I spent the past four years working through, historically. There are two major political parties as I alluded to, there's relatively the afro Guyanese led party and then there's indo Guyanese lead party. And, both parties have a long history in the country. There's good and bad about both sides of the equation. As a banker, it's not my job to get in the middle of some of those things. I stay on the outside and I will work with the government of the day and I support the Guyanese people as a whole and I'm here, like the international oil companies. My view of the country is that it's their country. It's not my place as an outsider or Gringo, as I like to call it, to come in and dictate or really align myself with either government. I want to see all of Guyana succeed. And I want to help contribute value to everyone. And the growth that's coming is going to happen regardless of who's in power. And ultimately, that's what we're working through. And as Guyana goes through these kind of gyrations and these, power struggles, if you will, because if you've done a research you realize that they had a, a five month disputed election last year that I was that I took part in which I never thought I lived through and witnessed firsthand, Latin America or a frontier market, election process, but it was quite an interesting journey. And it was, it was an experience and it's a part of if you look at every other market that's gone through the same cycles, political realm is a bit challenging. For me, I've talked a little bit about se through his background is looking to bridge the gap for financing and working with cities and governments and infrastructure. In the United States, I've done a lot of work through the various organizations I've been involved with on the startups and consulting side, working with US, the US government and different US states and municipal municipalities, and we've been down all the way to the county level. And so government's always has been a big part of my career. And ultimately, I would say, you alluded to it a little bit. But to really be successful in an environment you do have to operate at the intersection of government policy, and business opportunity. And so with that, it's in the United States, I've been fortunate my partner that I founded, Flashpoint with has worked hard and has gone out and with our ability to navigate governments in the US, we've secured commercial hemp processing licenses and girl licenses in Alabama and Louisiana. And so, with that, we do understand, and we've learned how to do it in the tier one markets. And so now coming down to a country like Guyana, I understand what it should look like and how it should function. And then it's helping get Guyana to the point where it's kind of functioning in the same way. Because, in order for investors to be successful investing in the country, there needs to be the legislative environment to support that investment. And I'm not talking about just incentives for investors and tax breaks and those kinds of things. It's the rule of law and, and structure and the maturation of society as a whole, to be able to take advantage of it and create a playing field that is fair to everyone because that's the thing foreign investors look for, when they come into these markets is how developed is the legislative framework. And how protected are we? And how, how are we going to be able to grow this investment? How are we going to be able to take the profits out once it's time? How can we work with the local country to support it and participate? Because it has to be a win for everyone. The age of imperialism was long, long gone. someone still say that the oil companies running in it coming in and throwing their weight around or, or the same thing but, if you really want to get an education just spend some time studying how Saudi Arabia and UAE and the Emirates and Qatar and the GCC was developed and everyone knows that GCC of today, but if you go back 50 to 75 years, it was the oil, the international oil companies that came in and built everything but they played a much more I want to say domineering role of how the country was going to be developed. And, in this day and age, now, those companies realize it's their job to stay out of it and not get in the middle of it. And that is one thing I think has been done very well by frankly, I don't have the first-hand experience, but I studied things a lot and do a lot of research. And as I been on this journey, I've spent a lot of time studying how these markets have developed in other parts of the world and looking for the patterns and practices my computer hacker mindset. And, with that process, I see a lot of similarities to your point, but I also see a lot of differences and it excites me because those differences are just going to speed up the evolutionary cycle of the country and speed up the growth cycle because of technology and transparency and all the good things that come by being able to start from scratch today. Guyana is going to be so well positioned to move into the future that I despite being probably one of the Polish people on Guyana you'll ever me still don't fully appreciate, what's the common Guyana but I know that it's going to be beyond everyone's wildest imaginations.

Jo-Ann Hamilton

Jumping to why you got to gain in the first place. So Guyana discovered oil, I think it's in 2015. Right? So how what's the story behind of that? How was somebody out there one day? Is it that type of story or were they suspect that something was there and I'm very curious to know why it's so late? Why only in 2015? Like, one would assume that, you would know by now in 2021 all the areas of the world where there is potential of having oil, right?

Steven Jasmin

No, absolutely. And it's a great place to start. So Guyana has oil resource back in, I want to say was 2002 but maybe a couple years off, but right around the turn of the century. Big report came out that's often referenced that believed there was a resource off the shore off the coast of Guyana, that could be upwards of 10 billion barrels, I think was their initial estimate for 12 or 13 billion barrels, I believe. And with that, Exxon has owned their lease in the country since I want to say mid-2000s. And they and there's been exploration there's a local so anytime you have an offshore resource from a development standpoint, it's historically if you look back over the past 75 years, offshore oil and gas was the most expensive way to get the oil out of the ground, right because it's obviously cheaper to just drill a hole and put a wellhead on it and pull the oil out of the ground. That's why the Middle East has been so successful because over the past 75 years or 150 years, they've worked 75 years in the Middle East 150 years in the global oil markets. They've they're able to get to that oil it's very shallow in the earth and but ultimately, every day you plot a barrel. That's one less barrel that's there. And so, there are all kinds of complex growth and decline curves. But the short answer is, is that it's been, the resource itself is 100 miles off the coast of Guyana. And it's only within the past, since about 2012 to 2015. The technology has gotten to the point where the cost of getting the oil out of the out of the ground has decreased to such a rate that you no longer have to worry about it and it's the most economically viable way currently to get oil out. And so with that in 2015 Exxon, found the oil they announced it and since then. When I landed in Guyana in June of 2017, It was a 2 billion barrel resource. As of today, it's roughly 10 billion barrel resource and now also surnamed was found a wheel. And don't forget, Guyana is right next door to Venezuela, which is one of the world's largest oil reserves and has had has been through its oil growth cycle. Nobody else has faced a lot of challenges. And as of today, Venezuela's pumping around 300 to 350,000 barrels a year in oil. And Guyana is already pumping 120,000 barrels a day. And so the field has been the quickest field to ever come online from a deep-water offshore perspective. All in the cost of production will be originally analysts thought it would be 30 to $35 a barrel. But as they keep finding more oil and they've had roughly 20 will prove it or commercially viable wells that they've drilled successfully out of about 22 wells using all the new state of the art technology that's been developed. And so in deep-water and oil exploration, oil and gas upstream exploration, your batting average is usually if you're doing 20 to 30%. When you're drilling holes, you're doing really well, but each one of those holes costs several 100 million dollars to drill, especially as you're bringing the infrastructure but in Guyana, they've been able to find oil and 20 out of 22 holes in a row there, and probably out of 26 polls that have been drilled since 2015. And so with that, it's created a confidence and they've been able to prove the resource. And so the upward number, has been revised that from the report that was issued back that I referenced earlier, and now they're looking at between 20 to 25 billion barrels is what some are predicting will be found in total, but either way within the next five years, Guyana will be producing north of 1 million barrels a day. And their price of production will be, between 20 and $25 a barrel, which is a fraction of what the United States now that its energy independent is producing oil at with all the fracking that's closer to $40 a barrel. And so with that, this is one of the most commercially viable fields in the world. And so and it's also an ultra-low sulfur crude, which the Liza crude is got a specific gravity between 31 and 33%, which is the easiest process and it's the most environmentally friendly type of oil. So if you look to places like Russia, and you look to places like some of the lot of the China production and Venezuelan and Iranian production, that production is, is the super heavy crude. It's almost like sludge that they come out of the ground. And so there's a lot of refining that needs to go into it, which means there's a lot of costs associated with it. And it also burns very dirty. And so with that, it's about shifting it so that it's just a very desirable paper career. So not only is it a large resource, it's also a very desirable resource, and it has a low cost of production. And so you don't need to know a lot about oil and gas. But if you've got a low cost of goods to produce, and you've got a lot of it, because there's a lot of infrastructure investment that has to be invested. So a lot of times you'll hear about people finding oil but not moving forward with commercialization of the wells. It's because there's not enough there for it. To make sense because they have to invest so much money to build out the infrastructure to get the oil to market. And so with that, in in Guyana's case, it kind of has hit all three checkboxes, and it's why it's such a uniquely positioned asset globally. And I love to tell people who are really looking to dig into Guyana over the past five years. One of the first places I tell them to start is, go pull the annual reports from Exxon and Hess and especially Hess and you'll see how these companies literally liquidated out and sold off large pieces of their interests to the world and their exposure to the oil and gas sector in other parts of the world, to be able to raise the cash to quickly bring these oil fields online. And so that's a big deal. And that's an exciting prospect and to watch a trillion dollar companies like Exxon Mobil sell off some very solid assets, if you will, specifics, in order to position themselves to have the cash on hand to make their capital calls necessary to invest in Guyana, and really kind of tells you the importance that they see in these fields and the opportunity that's going to be coming and how Guyana is uniquely positioned in the region to take advantage of it.

Jo-Ann Hamilton

I'm curious to know about do you believe that, I mean this this is all very new to Guyana; this oil and everything. What is the temperament, like are people excited? Are they worried? Are they scared? Because, as we all know, oil can be a curse and we know that. Sometimes countries, they find they get oil, they find this new oil wells and things go south, right? They don't always go well. And that has nothing to do with the discovery of oil. It's more about the management of the country. But I just want to get an idea of what how do people feel about the new this new oil boom, that's going to come and do and how are the people preparing? How is the government preparing? Are they looking at other countries? Are they do they have a plan a 40 year plan a 50 year plan, like what's going on the ground?

Steven Jasmin

Yeah, no, great question. You alluded to it a little bit from an academic perspective. One of the terms that get bandied about is, the Dutch disease that can follow some of these countries that that have these resource finds, and it's the natural resource curse as some of some refer to it. There is there very much is that concern, and I absolutely see it, as a potential to happen in Guyana, it's not it can't be dismissed. But what I can say confidently is that because of technology, because there's not a lot of legacy infrastructure that Guyana has to deal with, because everything is new, and it's kind of a tabula rasa or a blank slate on a going forward basis. The government and the country and the people are in a position to really knock it out of the park. And, the question that I get asked, in the boardroom and when I'm talking to in the investment committees and things like that, globally, is Guyana going to go the way of Norway or is it going to go the way of Nigeria, and it's a valid concern, and it's really kind of two ends of a pendulum. So my answers always, no one knows. And if anyone tells you they do, they're lying. Ultimately, everyone's entitled to their opinion. I personally am up to belief that Guyana is going to fall somewhere in between. I believe that the size of the find is a geopolitical importance globally. And so once again, Guyana is going to become a leverage point for a lot of the different countries and the different parts of the world that want to come in. Prior to the discovery of oil, China and Russia and America all had big influences in the country. But as the size of this research has come in, and the United States is winding down and trying to exit some of its responsibilities out in the GCC because there now we're a lot more energy independent in the States. I believe that Guyana, with all the investment from Exxon is an asset that's of geopolitical importance globally, and that the United States use it as such and from a policy perspective, is making it a very critical strategic priority on a going forward basis. And so with that influence and those pressures, if you will, I believe that Guyana will truly end up falling somewhere in the middle. And just because of technology and transparency and accountability that exist today, it's not going to face some of the same challenges that a lot of the African dictatorships have fixed. Guyana has been, a Republican the entire time it's been independent and they've had political unrest and political uncertainty and, and a lot of political tension over the past 55 years of their young history. But they've managed to maintain, a peaceful government structure and then that's something that you can't look to a lot of the countries in Africa and see that and on our preview, earlier in this conversation, we talked about the six peoples or the six nations that are make up the Guyanese experience and, and with that, that's six different viewpoints. So it's not just a one viewpoint wins type of country. And so I think that's helped to keep it balanced and fair and where the money is going to come from. The reality is, we track who’s coming in and out, in the jets and stuff that are coming into the country. And in that process, I can tell you that there's not been an overseas power and an overseas money center that has not come wanting to do business with Guyana. Right now, what Guyana is working through is, whose money do they want to work with at the government level? Everyone's wants a seat at the table, especially as we get into a post COVID era, where governments globally have printed so much money and I believe we're entering a period of hyperinflation, and then quickly into stagflation. Then with that other global from a global perspective, Guyana is uniquely positioned that the growth that's in Guyana is tangible, it's needed. It's real. You can touch and feel it. Does another hotel need to be built in, in New York City or in London. Or even in Bogota? Maybe, maybe not. But when everyone's economies are shrinking, last year, Guyana was the fastest growing country in the world. Even despite COVID pre COVID It was supposed to have a growth rate of about 85.6% for the IMF and as of March this year, when the IMF issued its closing out reports for the economic growth. It still ended up growing at roughly about 43%. And it was the only country in the entire hemisphere that had positive GDP growth. And so that's a big deal when you really start looking at the numbers and you start looking at the trends. And you look at the implications of that, because that shows and crews, the thesis that this is real growth and not just fake growth that's being propped up by printing money by some of these countries around the world to fight their way out of this shutdowns and the supply chain shocks that happened as a result of COVID.

Jo-Ann Hamilton

Yeah, I'm not surprised that investors say that to you, because we can look at Azerbaijan, we can look at Ecuador a few. When Ecuador found oil, of course there's Nigeria and Angola and all the oil rich countries in in Africa, right. There seems to be this trend, that oil is discovered. And then after that, everything goes south. Right. So how do you how do you counteract those arguments? I mean, like I know you just said, nobody knows. It's going to be somewhere in the middle. But how can you de risk that like, how can you be respect? Is it a matter of like looking to see what policies the government is going to put in place? Regulations, if they have a plan, like how, how do you how do you risk that? How do you plan for that? What can you tell evictions, I guess?

Steven Jasmin

Yeah. Well, it's, you want to lead from the front and you really help. Working on the ground is such a critical component of that. And that's one of the things I've realized early on was that I couldn't go happen on Guyana. I needed to go all in and over the past four years; it started out spending two weeks a month in the country. And then, I'd be back on the road for another week or two and then I'd spend a week or two homes and then from there went to four weeks and then now you know it was up to six weeks and then two weeks overseas, culminating with last year during COVID spending 330 days in country. And the only real answer I can give people to that is that ultimately, the investors that invest in these markets understand that risk first of all, and so they understand it, and they're able to mitigate it themselves, and accept it. More importantly, and that's the people I'm looking to work with, and that's the people that earn hearing coming. And from that, the next piece of the puzzle is, how's the local country going to grow and how is it going to ensure they're doing that and one of the things I point to is, everyone in the Caribbean At least knows Guyana's political history and know some of the challenges faced and so they're, they understand that and that's why they'll end up being the first check writers to come into Guyana, and so, just like, consider the Caribbean capital markets, if you will, the angel investors of Guyana, because they understand it, and they're going to be the first ones to come in. And then who's going to be the second check riders and who's going to be the third and fourth check riders? I fully understand and see and know but it’s got to work with people that understand that risk. And then part of it too is you get compensated for that risk, when you can mitigate it as much as possible and you're willing to take those chances. And so, over the past four years, by getting to learn the culture, getting to learn the mindset, getting to learn the essence of Guyana, as an operating entity, and as an ecosystem and as an operating environment. We've really, I'm not going to say we figured it out completely because no one ever does. But we have become the world's foremost leading experts in it and I don't say that lightly. You know what I mean that I know what the gravity of that statement is. And I can tell you that there are very few, I'd say probably less than five other bankers globally, that even understand Guyana, a 10th of what I do, and none of them have made the commitment to come in, and that's not discounting the local guy. He is and the local banking community and the organic capital market system, but, they're the Guyana and that capital market system that was built in this there that exists the day is, a fraction of what it'll look like tomorrow. And that's where, I see a lot of the growth and the opportunities and that's where we're positioning ourselves to take advantage of that we're really helped D risk this and work with the right partners that understand the risks are comfortable with it, and know what to look for and know that and know and appreciate that they need a partner like us to be their asset manager because we are on the ground operating. We do have the relationships, we do have the access. We do have, the understanding to be a successful asset manager and are we going to get it 100% Right? No, there's risk in life. Every day you wake up you could walk across the street to hit by a bus every day you wake up you know someone gets struck by lightning, you know what I mean? And so, you can never completely mitigate that risk, but it's our job to help understand it, explain it and navigate those waters and that's where we earn our piece of the pie. And it's, it's where we create that value for investors and so it helps align where they're going and where we're going. And so it's, and then focusing on smart money too, is another key component. Because money is easy to get access to, especially when you have opportunities like this, but you want to work with smart money, and that's really where our focus is. At this stage, we're not raising discretionary funds. We're not looking to just go around and write checks as an asset manager yet. We know that the economy and I've had people offering to give me money or want me to run money for them and deploy capital, and they want to give me 10s and hundreds of millions of dollars to do that right now. But it's just still too early. And I will be doing a disservice to them and myself. If I was trying to run, hundreds of millions of dollars and deploy because candidly, the country's not ready to absorb it. Exxon is able to invest that amount of money because they've got a whole monopolized infrastructure that they're building. But for the rest of the country, the long tail, if you will, from a development standpoint, that doesn't exist. And a lot of investors want to come in when the government starts spending money, and the beauty of Guyana and I think it's one of the signs that helps me talk about how they're going to be more in the middle is that they've not been squandering the will wealth that's been generated today. the country's not only found oil over the past five years, they put it into production. And as of this month, they broke the $500 million mark and revenue generated from the oil wells. That's literally I want to say a seventh of the current knees, the country's current global debt, you know what I mean? And so, they've got they're very well capitalized for the future and they haven't been squandering it yet. they're waiting to put the right regulations in place and the right corporate governance in place to manage that well, and I firmly believe that it will be managed responsibly, and because of, the transparency in the financial services sector nowadays. It'll be done in a manner that's very aboveboard and very clean. And then that's one of the things that we pride ourselves on is that we are the ivory tower in the white knight of the country. And we look to do honest and fair business and, much like the international oil companies, and we're not here to play, these typical frontier market shenanigans, and if people want to play that way, we wish them well and let them go do it their way. But this is where we've taken a more holistic approach. We're vertically integrated as an asset manager. We're not just deploying capital, but we're, we're overseeing it with our Bain Capital and being consulting model. And this is where we've positioned ourselves to really be able to take advantage of it and to de risk it because it's risk management and risk mitigation. So there's currency risk, there's country risk, there's political risk. There's, all kinds of extra, execution risks. When I first started telling people about Ghana, I, I can't tell you the number of people that said oh, well, they'll never get that asset producing oil and literally, they know that it would be the fastest offshore field to ever come online and go into production. I mean, and so, every day that goes forward, the risk profile for the company starts to go down. And as a result of a lot of the uncertainty and as a result of the country really kind of hit pumping the brakes, if you will, when they found the oil and just not going out crazy. Like a young guy that just inherited a bunch of money, and going and buying a Ferrari, they haven't done that yet. And really, they've done a great job as a country of trying to come up with a holistic plan and focus on reducing the cost of energy with the gas offshore pipeline and then a frontier market and I'm sure you've encountered this term, it's called capacity building. And so, the development banks have come in and really helped, with the amount of with the critical nature and the importance of the asset on a goal from a global perspective. There's been a lot of in a lot of countries and a lot of the major NGOs, have come in and are helping to provide some of the leadership and guidance so you got the World Bank, the IMF, the IDB has played a critical role over the past five to six years, and, and the country itself has just tried to take that long term oriented approach. They're doing a good job of diversifying away from just being a one trick pony with an oil asset. And so I can point to a lot of instances that they've done it and, ultimately, my current investment thesis for Guyana is not it's probably 5% oriented around the oilfield services sector, and really more focused on enabling the growth of the country from a commercial real estate development perspective. I mean, there's still no class A office space in the country. From the agriculture development, the value added manufacturing the canal occur, the criticality of the strategic nature of where it's positioned. There's going to be either a road or railroad from the interior of Brazil to Guyana, which will enable kids to get to market five days quicker for those Brazilian companies. And by doing that, that's once again going to create Guyana is not just an oil and gas country, but as a strategic beachhead for the entire hemisphere. And once again, it helps further and support my investment thesis that over the next 10 years, Guyana will become the Dubai or the Singapore of the region. And it'll even serve Panama from a financial services importance in my belief, and ultimately, it's going to become, and it's because of its, British heritage and the fact that it speaks English. And the unfortunate fact that the rest of Central and South America is kind of starting to experience a period of stagflation, that all that money in capital is going to want to come into Guyana, because that's where is the growth. And so coming back, the first tech writers I said are going to be the Caribbean capital markets. And then from there quickly, I believe, a lot of the Latin American money is going to start to come in and the country of Dubai has made Guyana an economic imperative in a strategic imperative, and so they're provided Guyana one and a half million dollars to go to the global world expo and have a pavilion so that Guyana can get access to trading partners and to organizations throughout the Middle East. Because the Middle East understands the growth cycle that Guyana is going through because, like themselves, Guyana is now facing, they were the ones that one of the families I work with, his father was on the founding board of Saudi Aramco and they watched the colonial exploration, oil and gas exploration playbook be executed. And they understand that Guyana is going through that same process, but now they're capitalized. And because that was just less than 5060 years ago and so now they're capitalized and liquid and in a position to really be able to support and enhance and chase that growth. And so, with that, it's really a huge opportunity moving forward as to how quickly the country's going to develop because all this money that understands it, and is looking for growth is going to come in and when you have different, money centers competing to help create a market or build a market and grow market, you end up creating that competition that allows you to accelerate the growth and to lower the cost of growth for the countries for the investors, and it creates a more efficient market which is critical. And so, with that, that's really how I see the growth over the next 10 years and how, the political risk plays into it, but there's a lot of people that need the growth of Guyana, in Guyana still doesn't even have not only a McDonald's and only two internationally like hotels. It doesn't even have any class A office space yet. You know what I mean? And so go to any major over the next five years, as I said earlier, Guyana will be one of 11 countries producing a million barrels of oil a day. And ultimately, they're going to be in a position to take advantage of it and they have all these people wanting to step in and help and play a critical role. Uncle Sam, Mike Pompeo from the previous administration in the United States, came in and talked about how Guyana was a strategic imperative for the United States. They came in wanting to invest over a billion dollars through the Development Finance Corporation and, and through Uncle Sam, you have all these countries wanting to help and jockey for position with Guyana. And I hope Guyana continues to stay relatively neutral and makes the right choices and makes the right partnerships so that it can continue to grow and I believe that it will and its leadership understands the criticality of it, and knows that they can't put all their eggs in one basket and as a banker working in Guyana, I know that I want a diversified group of partners and that I will be able to use the competitiveness of all these different groups seeking to get access to the market, to my advantage and to the country's advantage as we grow it together.

Jo-Ann Hamilton

Definitely and I think also a success story in the Caribbean, like Guyana, I mean, that's a win win for the whole region. It's going to spill over into the other countries. And then looking at South America right now, things aren't going too well in South America. So if Ghana can position them as that, beacon of light coming out of South America, I think there's a whole it would just be good for the entire region. So yeah, I'm with you. I hope the government continues to make the decisions and like you said, stay neutral and just hope for the best I guess that's all we can do. Right?

Steven Jasmin

And ultimately, all you can do is play with the hand you're dealt and, bob and weave as the market evolves and that's where you know having the right local partners and being boots on the ground, gets you that market data first. And that's really the criticality of it. And understanding it before it hits the press and before the rest of the world knows it, that's where as an asset manager, you're able to make bets and to and to position yourself to take the maximum of event.

Jo-Ann Hamilton

And don't underestimate the power of local knowledge, because I think that's the advantage. I mean, like he said, you got to understand this risk, like local knowledge is key. That's it. Once you have that you you’re halfway there. I do have one final question that I want to ask you, Steven. I'm just curious to know, have you looked at other countries in the region that have oil? So for example, like Trinidad and Aruba, just from a research perspective, just looking for insights on how they developed and just because they would be more similar to, I guess, Guyana, more so than say, another country in the world that found oil like Nigeria or Dubai, or what have you. And again, I'm just speaking randomly, I don't even know if it makes sense.

Steven Jasmin

I've obviously studied a lot of the world production my focus has been, when you're studying things you want to find things as similar to the profile of the guy on oil find. Yeah, we're, my study has been really oriented is offshore oil discovery, large quantity of oil discovered, so some of these places like you're alluding to Trinidad, for example, Trinidad, it's kind of at the end of its oil lifecycle. And it's a great example. There's a lot of lessons to be learned coming out of, last I heard this data point I'm a data guy, and I heard that the economic production of Trinidad's oil development over the past 100 years is roughly about $90 billion. And so that's a lot in today adjusted for today's dollars and in that $90 billion. You've seen how a country's developed and you've seen what they've done. But then you also have to take that development scenario, and look at where the differences are and where the similarities are. And so with that, I've this is why I've kind of skipped a lot of the regional side. I've been focused more on the Gulf Coast countries because from a population standpoint, and a growth standpoint, so that $90 billion in the resource and development, growth of Trinidad over the past 100 years, is a much different life cycle and story and arc, if you will, then the GCC countries because they're different factors and the size of the rock find wasn't isn't the same. The position Trinidad was never one of the 11 copper oil producing nations in the world, I mean, then Guyana will be and so that's a very elite club. And so you kind of when you're doing analysis, you want to learn it ever to learn from everything and look everywhere like you, you're absolutely right. But you also want to make sure you're trying to compare apples to apples and so this is where I spend a lot of time studying, the Gulf Coast countries. I've studied some of the African Development, some of the obviously I started my oil and gas sector work down in Louisiana, with the United States and the offshore oil and gas industry. But and with that, it's about finding the right comparison pieces and it's hard to find a perfect fit. You kind of got to look for different pieces of the puzzle, from the different profiles. And to your point, some of the Caribbean producers and some of the lifetime recruits producers have interesting parallels you look to Venezuela, that's a a prime example. Yeah, and it also is a prime example of everything. That can go wrong and the wrong decisions that can be made. And but at the same token, you look to Norway and you looked at the Aberdeen fields, and the fields out offshore London, and you look to the stuff out, off the coast of Alaska and you start to kind of find similarities, and my team and I look through that data, and we try to that's where we focus in our research efforts and focus in to find some of the similarities so that we can accelerate and bring those lessons and knowledge to help guide Guyana as it goes through those same growth cycle.

Jo-Ann Hamilton

Yeah. Oh, wow. That's wonderful. I learned a lot from that. This is fascinating. I love how you said that. Like, like with anything else, like your reference in series one to real estate. When you're investing in real estate or looking to do a development you look for comps, right? But you want you want what is actually comparable. So basically, Guyana isn't comparable to Trinidad. Lessons learned and what not to do. You want to put them in the training ballpark that the country that we're going to be upgrading? Yeah, that was great.

Thanks for listening to this special bonus series of the Redbirds emerging markets podcast on Guyana. You have just listened to part 2, the Guyana story. If you enjoyed listening in, rate us on your favorite podcast platform, and if you thought this were informative, we look forward to seeing you for part 3, startup nation. Until next time.

Bye for now.