38.5 billion earmarked for infrastructure development ahead of first oil

Guyana’s Finance Minister, Winston Jordan during his presentation of the 2019 National Budget on Monday, November 26, 2018.

Guyana’s Finance Minister, Winston Jordan, announced on Monday that 38.5 billion Guyana dollars – around US$183M – has been earmarked for major infrastructure development works in the South American country ahead of first oil in 2020.

Mr. Jordan said this sum will also aid in the expansion and diversification of the non-petroleum assets. “…we have allocated $38.5 billion to expand and maintain the infrastructure, principally, in recognition of the emergence of oil and gas, as well as the expansion and diversification of our non-petroleum assets. It is our roads, bridges, ports, stellings, airports and aerodromes that will be assessed and expanded to catalyse the transformation that is no longer an illusion but, a reality brimming with hope,” he told the National Assembly in what is his 5th budget presented since the APNU+AFC coalition took up office in 2015.

Of the amount budgeted, 71.9 percent will be spent on upgrading or adding to the capital stock, while the remainder would go towards maintenance and repairs, he stated. “This sizeable allocation will result in improved movement of people and goods, both, nationally and internationally, enhanced resilience of coastal and riverain communities, and improved efficiency in services delivered to the citizenry of Guyana.”

Government will also be looking to fast-track the establishment of an Oil and Gas Unit within the Guyana revenue Authority (GRA) which will be tasked with ensuring that the appropriate revenues are paid to the state by petroleum-producers, in keeping with their respective production sharing agreements.

“Already, the Government has secured the support of international institutions to undertake capacity building initiatives in the GRA and other institutions, providing expert advice in several areas, including cost-oil audit and production sharing agreements,” the Finance Minister said.

The commencement of commercial oil production is slated for early 2020, using a floating production storage and offloading (FPSO) vessel that will produce around 120,000 barrels of oil per day at peak. Oil production is expected to rapidly increase as US oil major ExxonMobil, the operator in the Stabroek Block, move to develop multiple fields using at least five FPSOs that will see production expand to around 750,000 bpd.