– Guyana expected to end year with US$200M in oil revenue
– fourth lift expected early December
By Navendra Seoraj
GUYANA is on course to ending 2020 with close to US$200 million (roughly G$42 billion) in its Natural Resource Fund (NRF), which has remained “untouched” since its creation in January this year.
These funds, banked in an account at the US Federal Reserve Bank, are generated from the sale of crude oil, which is being produced by ExxonMobil’s Liza phase one development, offshore Guyana, in the Stabroek Block.
Guyana, new to the oil-and-gas sector, sold its first one million barrels of crude on February 19, 2020, raking in nearly US$55 million. In its second million-barrel sale, the country received US$35 million and US$46 million as proceeds from the sale of its third million-barrel of crude.
Along with these deposits and the US$4.9 million in royalties received from first-quarter gross production and interest, Guyana has over US$140 million in its NRF. The country had agreed to sell its first three cargoes to a trading arm of Shell on a dated ‘Brent’ basis. The oil market is volatile, but Brent price was listed as US$42.94 per barrel of oil on Thursday.
Guyana’s fourth shipment of crude is expected early December and Government is working to secure a suitable firm to market Guyana’s crude.
The country is entitled to five crude cargoes for this year, as part of its profit share with ExxonMobil and its Joint-Venture (JV) partners. This means that with Shell having received its three cargoes, the country can market its crude to another company or location.
“We have a special evaluation team of local and foreign experts, who are looking at those tenders to ensure we have the best suited company to market our oil,” said Minister of Natural Resources, Vickram Bharrat, during an exclusive interview with Guyana Chronicle on Thursday.
Recently, the Government decided to re-tender the Request for Proposal (RFP) for companies to market Guyana’s crude, with the aim of correcting bids made under the former APNU+AFC administration. Previously, 34 large oil traders had submitted proposals and 19 were shortlisted. It is likely that many of these companies or more will re-submit proposals.
“Once this is over, by the end of 2020, we should have in our fund, close to US$200 million… and we have not used a dollar from that,” said Minister Bharrat.
Vice-President, Bharrat Jagdeo had said no money from the fund will be used until Government amends or repeals the existing NRF Act.
The Government had committed to addressing important issues of transparency and ensuring systems and institutions are in place before those funds are utilised.
Sections of the media also reported President, Dr. Irfaan Ali, as saying Guyana’s oil revenue will remain untouched until a series of reforms are enacted to strengthen the Government’s regulatory infrastructure for the oil and gas sector.
“My Government is focused heavily on transparency and accountability. As you know, we have demonstrated this after the negotiations of the licence for the Payara. Not only did we make the agreement public, but we also made the environmental permit public, so nothing is done in secrecy.
“I’ve said before, there’ll be an arm’s length relationship with the politicians. We had international experts, leading those negotiations and discussions,” said the Head of State.