Major 35-well campaign could generate more revenues for Guyana; earnings now in excess of $720 billion

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Since the commencement of operations in 2015 to support ExxonMobil Guyana’s two offshore production vessels, the nation has earned in excess of GY$720 billion (US$3.45 billion). Should the Environmental Protection Agency (EPA) grant approval for the oil major’s 35-well campaign at the Stabroek Block, this could push the country’s take well beyond the one trillion Guyana dollar mark as more discoveries are made and developments come online.

Royalties and profit oil earnings from the Liza Destiny and Liza Unity vessels to date stand at GY$455 billion. This sum includes revenues currently in the Fund, the nation’s first withdrawal in 2022 totalling GY$126 billion, and GY$41.7 billion withdrawn last month to support the 2023 budget.

In terms of local content earnings, Exxon’s spending since 2015 has been more than $126.6 billion. Also significant is that the passage of the Local Content Act has secured over $147.7 billion worth of in-country spending for 2022.

It therefore means that the country has seen direct fiscal benefits totalling $729 billion.

This is expected to increase significantly once the EPA approves the 35-well programme. According to the project’s Cumulative Impact Assessment (CIA), it is expected that the initiative would bring further benefits through the procurement of select goods and services from Guyanese businesses. Exxon said this would be in alignment with the 2016 Petroleum Agreement and the company’s Local Content Plan which was approved by the Ministry of Natural Resources in June 2021. It also noted that there would be employment opportunities which would be defined at a later time.

If the project is not allowed to proceed, the report said that the Government of Guyana would not be able to take advantage of future revenue-sharing opportunities with ExxonMobil Guyana and its co-venturers.

Exxon also cautioned that the absence of the project would eliminate associated induced economic benefits resulting from the re-investment, hiring, and spending by project-related businesses and/or workers, which in turn benefit other non project-related businesses and generate more local taxes for the government.

Pending receipt of approval, it is anticipated that the project will begin in the third quarter of 2023 and conclude by the fourth quarter of 2028.

The 35-well programme would be operating alongside Exxon’s sanctioned projects at the Liza field, Payara, and Yellowtail discoveries. Two other development ventures at the Uaru and Whiptail discoveries are being assessed by the EPA. They would all serve to increase the pool of fiscal benefits for the nation.

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