Finance minister says major transformation from oil money coming; promises tight controls on revenue

Winston Jordan, Guyana'a Minister of Finance

Guyana’s Finance Minister, Winston Jordan, says the revenue to be earned from the first phase of oil production in the South American country – around US$300M annually – will go directly into the Natural Resources Fund and will eventually begin to facilitate transformational changes in the country.

Speaking at a press conference at Parliament on Wednesday, he explained that “What is the formula right now is that we get 50% plus 2% royalty, so it will be about 300 (million) from Liza Phase 1 production of 120,000 barrels per day for a full year coming into the coffers.”

Mr. Jordan said this would begin to facilitate significant developments in the country, adding that it is also important to note that the monies that would be earned will go directly into the Natural Resource Fund.

“So, it is not available to the Government yet. Some of it will become available based on the legislation when it is passed and when that legislation is operationalized then they are rules for withdrawal from the fund,” he said.

To this end, he pointed out that the 300 million dollars will go ‘offline’ and will not be managed in a way that could cause potential disturbances to the country’s economy.

“The 300 million will go offline so it does not create disturbances to the economy…So the legislation is tight on how we should withdraw money, for what purposes and so on,” he stated.

As it relates to economic development, he underscored that monies would be withdrawn and deposited into the Consolidated Fund.

Rystad Energy estimates that Guyana could earn over 100 billion US dollars from oil production based on multiple development projects offshore. ExxonMobil, the operator in the 6.6 million acres Stabroek Block, says as much as 750,000 barrels of oil per day could be produced by the mid-2020s with potential for additional production from significant undrilled targets.

Mr. Jordan said with the monies expected to be earned from the production of oil, Guyana could see great improvements to its social and economic well-being. “I foresee improvements in the social and economic status of Guyana. I foresee progressive improvements in the human, cultural and every other developmental aspect of the country.”

Commercial oil production is expected to commence in Guyana by March 2020.