THE revenue-generating potential of Guyana’s oil and gas sector continues to be displayed, with the latest indication of this being the receipt of $4.3B in oil-and-gas royalties.
Specifically, according to the Bank of Guyana, some $4,390,903,000 was, in April, deposited into the Natural Resource Fund (NRF) – an account at the US Federal Reserve Bank which stores direct returns from the oil and gas sector.
Based on the report from the Central Bank, this payment increased the balance of the fund to US$741,047,527.69.
Article 15.6 of the Petroleum Agreement says royalties are estimated every month, and must be transferred to the government 30 days after each quarter.
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 their production cost.
It was reported recently that the government made its first withdrawal from the NRF. Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, said that pursuant to Section 16 of the NRF Act 2021, US$200 million equivalent to G$41.7 billion has been transferred from the NRF to the Consolidated Fund to finance national development priorities.
This transfer, according to a statement from the Ministry of Finance, was made in accordance with the strengthened legal architecture of the NRF Act 2021 and follows the publication in the Official Gazette of all petroleum revenues paid into the fund during the period 1 January to 31 March 2022.
The NRF Act 2021 which came into operation on January 1, 2022, represents a significant improvement in transparency and accountability and the overall management of the natural resource wealth of Guyana for present and future generations.
It would be recalled, that as part of the Budget 2022 process, parliamentary approval was granted for a total of US$607.6 million to be transferred during the fiscal year 2022.
Oil and gas revenues are being generated from the ExxonMobil operations, offshore Guyana.
As it is now, the company has four sanctioned projects offshore Guyana. Of those, Liza Phase One is producing approximately 130,000 barrels per day, using the Liza Destiny floating production storage and offloading (FPSO) vessel, while the Liza Phase Two, which started production in February, is steadily ramping up to its capacity of 220,000 barrels per day, using the Liza Unity FPSO vessel.
The third project, Payara, is expected to produce 220,000 barrels per day; construction on its production vessel, the Prosperity FPSO, is running approximately five months ahead of schedule, with start-up likely before year-end 2023.
The fourth project, Yellowtail, is expected to produce 250,000 barrels per day when the One Guyana FPSO comes on stream in 2025.
ExxonMobil is also moving ahead with plans for its fifth development project in the Stabroek Block, Uaru, which is expected to produce up to 250,000 barrels of oil per day.
“These projects will bring huge benefits to Guyana,” President of ExxonMobil Guyana, Alistair Routledge, said during a brief interview released by ExxonMobil.
It was reported that returns from the sector are expected to catapult Guyana to the ranks of wealthiest countries in the Western Hemisphere, thereby increasing the government’s fiscal space to invest in initiatives geared at expanding the economy, and improving the overall welfare of citizens.