Part 5: Oil and Gas

LIKE everywhere else, reading mainstream and social media reports, in this case about Guyana’s oil & gas experiences, can be good or bad news — depending on who’s writing and reading what, where and when, no matter how.

Of late, I’ve read media criticisms and complaints of virtually everything so far undertaken in energy matters by the current PPP/Civic administration, including (but not limited to) the following:

Agreements with the oil majors sell Guyana short; government’s ‘inability to see’ where and how it’s being outsmarted by the oil companies; approval of more oil projects is ‘detrimental’ to Guyana’s future; a gas-to-shore project is ‘ill-conceived,’ because it ‘won’t improve electricity’; the absence of ‘whistleblower protection legislation’ ; government’s ‘silence’ on an audit of the earnings of the biggest local oil investor; don’t allow ‘greedy foreigners’ to destroy Guyana; Guyana’s welfare is more important that oil & gas — and the latest related columns by Christopher Ram and Dr Clive Thomas, et al.

One interesting headline was that ‘Guyana Won’t Become Next Dubai Without Foreign Expertise and Development of Entrepreneurial Talent’ – this one alongside another announcing ‘Exxon Seeking Project Manager for Construction of Training Institute in Guyana’ that stated, in part:

‘ExxonMobil Guyana is seeking a project manager for the construction of the national oil and gas training institute it is building, in partnership with the Guyana Government. The institution, styled the Guyana Technical Training Centre Inc., will be situated at Port Mourant, Berbice…’

I also noted the following headlines (among many others):
Guyana Opens Tenders For Its First Oil Refinery; CNOOC Petroleum Opens Local Headquarters; Guyana Being Positioned To Be A Leader in Renewable Energy; Guyana’s Electric Vehicle Charging Stations Expected in Four Months; Law Empowers Local Content Secretariat to Have Unrestricted Access to Oil Companies’ Facilities, Records & Reports; Catering Consortium to be Formed to Supply Food to Oil and Gas Vessels; Local Educator Says Rapid Development of Skills Must Be High on Guyana’s Agenda; Guyana, Qatar Discuss Avenues for Growth in O&G Sector; Construction of topsides commences in Singapore for Exxon’s 4th Guyana FPSO; ExxonMobil Guyana Pumps $3.6M into New Era Futsal Tournament; Government Invites Proposals for Oil Refinery at Crab island; Almost US$1 Billion in Oil Revenue Could be Plugged into Guyana’s 2023 Budget; Guyana Rakes-in Biggest Windfall from Quarterly Oil Production; Oil Money Helping To Ease Impact of Inflation — and More Guyana Barrels Will Go to Europe.

The story on almost US$1 Billion Pumped Into Guyana’s 2023 Budget, reported by OilNOW, said: ‘Guyana’s updated Natural Resource Fund (NRF) Act outlines a clear and simple formula for the calculation of withdrawals allowable from the Fund each year. Based on this formula, using US$1.247 billion expected from oil in 2022, approximately US$998.5 million is projected to be available for withdrawal and spending in the new year. This would represent 80 per cent of the Fund’s expected 2022 inflows. Consequently, US$248.5 million (20 per cent) remains in savings.’

The details came from the Bank of Guyana, the operational manager for the NRF, which disclosed that ‘third-quarter inflows’ amounted to GY$102.82 billion (US$493.18 million) comprising oil profit totalling GY$92.18 billion (US$442.12 million) and royalties totalling GY$10.64 billion (US$51.06 million). The receipts of oil revenues into the fund for the period July to September, 2022, represented ‘the highest quarterly inflows’ and ‘Inclusive of royalties, the account has received US$1,444,875,131.97 in earnings since its inception,’ which earnings are deposited in the NRF’s account at the Federal Reserve Bank of New York.

The story on Oil & Gas revenues is being used by Guyana to reduce the impact of inflation reported: ‘Following the passage of the NRF legislation, the Guyana government has been able to authorise a US$607.6 million transfer to support the 2022 budget. The administration has said that the withdrawal would be used to invest heavily in capital expenditure, while supporting the critical needs of the vulnerable population. The government was keen to note that the strong oil windfall is therefore allowing the authorities to improve the standard of living of citizens, as well as temporarily lower rates or remove taxes on selected items, including gas and diesel fuels, to mitigate the impact of rising inflation.’

The story about More Guyana Barrels To Go To Europe’ also noted: ‘With Europe scrambling for alternative energy sources in wake of the Russia-Ukraine war, Guyana’s light, sweet crude has assumed greater importance to the continent’s consumers. This was discussed by Scott B. MacDonald, Chief Economist for Smith’s Research & Gradings and Research Fellow with Global Americans, who also disclosed Guyana had exported 116,900 barrels of oil per day (bpd) of crude in 2021, most being sold to Asian countries, including China and India, while shipments to Europe accounted for around 16 per cent of the total.’

As I followed the unfolding political scene in the UK where Prime Minister Liz Truss and her six-week-old government were struggling for survival, it was interesting to note that while she accepted full blame for all that happened under her brief watch, the one thing she held on to and pointed out most repeatedly, was that never mind her leadership of the government was shorter than her leadership campaign, it had delivered on her promise to assist Britons with their energy bills.

And as I listened to PM Truss announce her immediate resignation as party leader (and as Prime Minister in a week), I knew the deepening political impasse will most likely delay any deal between London and Georgetown for transatlantic oil & gas transfers; but I also knew that what was on Guyanese minds most last week wasn’t the future of trade between the UK and Guyana, but rather the visa waiver that’ll allow everyone with a Guyana passport to visit Britain and stay for six months – no matter who’s the next UK PM!