Guyana’s Natural Resource Fund (NRF) could get way more revenue than projected in 2024, due to higher than expected oil production.
S&P Global projected 632,000 barrels per day (b/d) oil production for Guyana in 2024, a more than 60% growth from the prior year. Such a projection would translate to approximately 230 lifts of crude oil, rather than the 202 lifts projected by the government.
Government’s projection amounts to an average of approximately 552,000 b/d, though S&P’s projection is more consistent with actual production. According to government data, the ExxonMobil-operated Stabroek Block produced 619,000 b/d in the first five months of 2024, with a higher average of 632,000 b/d in May. This higher production leaves room for a proportional increase of more than US$2 billion in export value on top of the US$16.8 billion January projection from the Ministry of Finance. Production this year will also be impacted by two-week shut-down periods at the Liza projects to hook up a gas pipeline.
The Guyana government had projected its oil fund receipts would amount to approximately US$2.4 billion. This is based on an expectation of sales of 25 million-barrel lifts of crude, amounting to US$2.08 billion, as well as royalties of US$319.9 million. With higher production, the government is likely to revise its projection upward in its Mid-Year Report usually published in the third quarter.
Increased oil exports could also accelerate cost recovery by the ExxonMobil-led Stabroek Block group. The companies, including Hess and CNOOC, can take up to 75% of the crude produced annually to recover the funds invested to explore and develop the resources. The group has committed to invest more than US$50 billion, with substantial expenses already incurred. Cost recovery in 2024 is expected to amount to more than US$12 billion, with the accumulated total surpassing the US$30 billion mark.
The oil sector accounts for a majority of Guyana’s gross domestic product (GDP). S&P’s assumption for Guyana’s oil production this year is, therefore, the basis of a broader forecast that the country’s economy will grow 45%. This is significantly higher than projections by the government, the World Bank and the International Monetary Fund (IMF).
Nicolás Suarez, a senior economist at S&P, said in May that withdrawals from the country’s oil fund are a major source of development funding, but that Guyana still needs support from private investments.
S&P said however that double-digit economic growth is expected to continue with 10.3% projected in 2025. With oil production increases expected next year as well, revenues to the government are due for another bump.
