Seventh oil lift could earn Guyana US$75M
Minister of Natural Resources, Vickram Bharrat
Minister of Natural Resources, Vickram Bharrat

–highest ever returns since trade of commodity started locally

WITH oil prices on the rise globally, Guyana could see the returns from its burgeoning petroleum sector growing, starting with earnings from the sale of its seventh oil lift, which could rake in around US$75 million.
The country’s seventh oil lift was safely and successfully completed by operator, ExxonMobil, aboard the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel offshore Guyana last weekend. This is according to Minister of Natural Resources, Vickram Bharrat, in his response to questions from the Sunday Chronicle.

Lifts of about one million barrels of oil are done every eight to nine days. And, with Brent crude oil, the index Guyana uses to sell its crude, at more than US$75 a barrel, Guyana could easily clear US$75 million, the highest amount garnered since the nation started trading this commodity.
Having earned over US$60 million from the sale of its sixth oil lift, and received US$13.9 million in royalties in the first quarter of this year, Guyana has in its Natural Resource Fund (NRF) over US$344 million.

A pictorial representation of ExxonMobil’s operations offshore Guyana, in the various blocks (ExxonMobil’s photo)

Specifically, according to the Bank of Guyana, the nation ended June with US$344,161,633 in its NRF at the U.S. Federal Reserve Bank. Revenue garnered from the sale of the seventh oil lift could push Guyana’s total earnings to close to US$420 million. It was in early March that Guyana also benefitted directly from its petroleum sector, receiving US$61,090,968 (approximately G$13 billion) from the sale of the nation’s fifth oil lift.

The fifth lift was sold to New York-based Hess Corp, which, in turn, vended the local crude to HPCL-Mittal Energy Ltd (HMEL), a joint venture between State-run Hindustan Petroleum Corp. and Indian steel tycoon, LN Mittal. HMEL reportedly operates the 226,000 barrels per day ‘Bathinda’ refinery in the northern state of Punjab.
Prior sales of local crude, particularly the first three, went to a trading arm of Shell on a dated ‘Brent’ basis. Guyana 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 another 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.

It was reported in May that the country’s total revenue is expected to increase by 17 per cent, with earnings in the petroleum sector alone reaching well over US$500 million by the end of this year.
The Inter-American Development Bank (IDB), in its Caribbean Quarterly Bulletin, which was released in May, stated that with Brent crude oil at more than US$60 a barrel, and the expectation of oil production increasing by 46.7 per cent in 2021, the government’s oil revenues could significantly increase this year.

Over the medium-term, according to the IDB, oil production is expected to continue driving GDP growth, with oil exports growing by an annual average of 48.5 per cent over 2020–2023, contributing to average annual GDP, and Government revenue growth rates of 17.1 and 6.7 per cent, respectively, from 2021 to 2026.
The prospects are even brighter, given that ExxonMobil, on June 10, announced their 20th oil discovery in Guyana, and increased the estimate of recoverable petroleum resources. Additionally, ExxonMobil updated its development plans of having five oil- production projects by 2026 to six projects by 2027, which they feel could potentially grow to ten production projects in the future.
ExxonMobil’s first offshore Guyana project at the Stabroek Block, Liza Phase One, began producing in late 2019, well ahead of the industry’s average for development time. Liza Phase Two remains on track to begin producing oil by early 2022.

Liza Phase Two will produce up to 220,000 barrels of oil per day at peak rates, using the Liza Unity FPSO. Late last year, the oil giant, following an agreement with the Government of Guyana, decided to proceed with the Payara field development offshore Guyana.
Payara is ExxonMobil’s third project in the Stabroek Block, and is expected to produce up to 220,000 barrels of oil per day, after start-up in 2024, using the FPSO vessel. The US$9 billion development will target an estimated resource base of about 600 million oil-equivalent barrels.

According to Westmount Energy, Guyana, with its positive prospects, and vast potential, remains one of the few areas of “blue-chip” interest in high-impact exploration. Investopedia defines blue-chip stocks as secure investments, because they pay out dividends, as well as consistently and steadily grow over time.
Progress in the petroleum sector will be supplemented by advancements in other sectors; this is reflected in the projections for the country’s non-oil economy, which is expected to rebound by 6.1 per cent in 2021, based on the assumption of a phased re-opening of the economy, with services and construction growing by five and nine per cent, respectively.

SHARE THIS ARTICLE :
Facebook
Twitter
WhatsApp

Leave a Comment

Your email address will not be published. Required fields are marked *

All our printed editions are available online
emblem3
Subscribe to the Guyana Chronicle.
Sign up to receive news and updates.
We respect your privacy.