–untouched Natural Resources Fund tops G$58B
GUYANA’S burgeoning oil-and-gas-sector continues to pump finances into the country’s Natural Resources Fund (NRF), with some US$61,090,968 (approximately G$13B) being earned from the sale of the nation’s fifth oil lift.
The Government, in keeping with its commitment to accountability and transparency in the petroleum sector, has announced that the country received its latest payment after the sale of 997,420 barrels of oil which were lifted from ExxonMobil’s Liza Destiny on February 5, 2021.
The nation, new to the petroleum 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, US$46 million as proceeds from the sale of its third million-barrel of crude, and US$49.3 million from its fourth oil lift.
Based on a consolidation of all the lifts to date, the country has sold 5,009,797 barrels of oil valuing US$246,542,662.
Along with the earnings from the oil lifts and over US$21 million in royalties and interest, Guyana has close to US$267,668,709 in its NRF, at the U.S. Federal Reserve Bank. Under the Production Sharing Agreement (PSA), Guyana receives two per cent royalty and 50 per cent profit oil, which is what remains after the producer recovers the production cost. Vice-President, Bharrat Jagdeo, had said no money from the fund will be used until the 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.
It was reported, in August last year, that oil revenues must be used to build the economy of the future which must feature supportive infrastructure such as good transport, deep-water harbours and modern airports as well as to strengthen the productive sectors. “The oil resources have to be spent in a fashion that doesn’t create the Dutch disease where relative prices are changed and kills the competitiveness of other sectors,” Vice-President Jagdeo had said. He said too that oil revenues will be spent to improve the lives of the citizenry and Government will pass local content legislation that will address the issues of the business community and ordinary Guyanese. Already, a draft local content policy has been developed, and this includes a series of phased targets for improved local participation, benefits and general advancement across all sectors, which will be achieved within the next 10 years, should the timeline remain unamended at the end of the ongoing national consultation exercise.
The overarching aim, as outlined by the Government, is to create a policy which guides and regulates local participation in existing and emerging sectors. This policy and subsequent legislation must be responsive to change and provide the ‘space’ to accommodate expansions in an economy such as Guyana’s, where there has been an increase in investors’ interest. The Government of Guyana, through the Ministry of Natural Resources, has so far worked with both international and local professionals to craft a comprehensive policy, which includes realistic and realisable targets.
The existing local content policy document, in its crude form is not final. The idea is for the various stakeholders and segments of civil society to examine the draft document and propound realistic and pragmatic targets.