Twenty-four months have gone by since ExxonMobil began producing oil at the prolific Stabroek Block offshore Guyana. The government has exported approximately nine million barrels of Liza Crude over this period – four in 2020 and five this year – representing its 50 percent share of profit oil.
As of October 31, Guyana’s Natural Resources Fund (NRF) stood at US$534 million. The government exported its final one-million-barrel oil cargo for 2021 in November. With the final lift for this year completed, Guyana will have over US$600 million (GY$124 billion) in oil revenue for the nine million barrels exported to date.
Over a 24 month period since production began, this works out to over US$830,000 earned per day in oil revenue for the South American country.
And this is just the beginning.
With the arrival of Guyana’s second floating production storage and offloading vessel (FPSO) and start of oil production by early 2022, at peak 220,000 barrels of oil per day (bpd) will be added to the already producing Liza Phase 1 project – 120,000 bpd – taking total output to around 340,000 bpd.
“Come next year, 2022, we are expecting to see the amount of lifts, the amount of economic activities and the amount of revenues coming to Guyana…more than double,” Senior Petroleum Coordinator at the Ministry of Natural Resources, Bobby Gossai Jr., told members of Guyanese diaspora in October.
A third project at the Payara field has already been approved, targeting start-up in 2024 and a fourth at Yellowtail is pending government approval, with first oil expected in 2025/2026.
When the Yellowtail FPSO comes into production the Guyana government will be exporting around 50 million barrels of oil per year.
“So, when you crunch the numbers, 50 lifts at a million barrels and based on the oil price today if it continues along that trend, you can see or get an idea of the direct proceeds coming to Guyana…And we are not even talking royalties yet,” natural resources minister Vickram Bharrat told OilNOW in October.
Concerns raised over oil fund transparency
The government has not yet spent a cent from the oil revenues received to date. New proposed legislation which is now before Parliament sets out the mechanism for how the Natural Resources Fund is to be administered.
Critics say a Board of Directors which is to be established to provide regular management and oversight of the oil revenues may not be transparent since it will be appointed solely by President Irfaan Ali, elected at last year’s polls.
But Mr. Ali has strongly pushed back on these claims, asserting that his government was given a clear mandate by the Guyanese people and he has every intention of delivering on their expectations.
“The president will not just wake up and collect a few men and women and put them on a board and say this is the Board of Directors,” he said on Tuesday. “The bill makes it very clear; the minimum qualifications of board members are stipulated in the law and the membership of the board is required to be published in the Gazette.”
The new proposed legislation also requires the minister of finance to publish information in the official gazette on all receipts into the fund and table this information in the National Assembly. Failure to do so will result in harsh penalties that were not previously in place.
“The consequence will be three to ten years imprisonment. So, not only are we setting out the principles, enhancing transparency, but we are willing to put the harshest of penalties because we do not intend to keep any information in relation to the management of the Natural Resource Fund away from the public,” Mr. Ali pointed out.
Notwithstanding concerns over how the revenues will be managed, it is clear that Guyana is positioning for a massive windfall.
Norway-based energy research and business intelligence company Rystad Energy estimates that Guyana will rake in over $300 billion in revenue from its vast discovered resources at the Stabroek Block with an oil price in the range of US$80 per barrel.
Exploration offshore Guyana also intensified this year as ExxonMobil probed new wells and further investigated existing discoveries where additional hydrocarbon resources could potentially be found. In announcing its most recent discovery in October, the oil major increased its resource estimate for the Stabroek Block to 10 billion barrels of oil equivalent.