The Guyana government is on course to withdraw US$2.3 billion in oil revenue from its Natural Resource Fund (NRF) in 2025 to support that year’s budget. This would represent a 46% increase from the almost US$1.6 billion amount approved for use this year.
Since the government started spending from the fund in 2022, annual withdrawals have increased by an annual average of 56%. This reflects the policy of the administration to use the country’s oil wealth for capital projects, including roads, bridges, schools, hospitals and energy expansion. Vice President Bharrat Jagdeo frequently stresses a preference for spending “for the future”, rather than on steep salary hikes. However, the government has promised that compound increases to salaries over a few more years will place key public servants like teachers and nurses on par with their counterparts in the developed world.
Over US$800 million in oil revenue plugged into Guyana’s development agenda so far this year
The government this year revised the rule in its oil fund legislation, raising the ceiling on annual withdrawals from the fund. The amendment increased the 2024 ceiling from US$1.154 billion to US$1.586 billion — 98% of the 2023 deposits. The government is expected to withdraw US$736 million more from the NRF in the last five months of 2024, having already withdrawn US$850 million since January.
In 2025, the new rule would allow the government to withdraw US$2.309 billion — 96% of the projected 2024 deposits. Just US$90 million would be saved from this year’s projected deposits. Evidently, the new rule places less emphasis on saving; the old rule would only allow a withdrawal of US$1.27 billion, saving more than US$1 billion from this year’s deposits.
The rule ties withdrawals to deposits from the preceding year, which means amounts left over from earlier years will be saved entirely.
Status of fund
The government projected US$2.08 billion in payments for 25 million-barrel lifts of crude. Payments for 15 lifts from 2024 were deposited into the fund in the first seven months.
Outside of the 2024 projection of US$2.08 billion in oil sales, payments for two 2023 lifts were deposited into the Fund in January and February. Also, higher than expected crude production this year could see more lifts allocated to Guyana — hence, more oil sales revenue and royalties. These factors create upside potential of over US$100 million for the government’s US$2.3 billion 2025 allowance.
Guyana poised for way more oil revenue than projected this year
With the government projecting royalties of US$319.9 million this year, three of four quarterly payments were deposited into the Fund as of July. These amount to US$263.5 million. The remaining payment is expected in October.
The Fund closed July with US$2.85 billion.
All revenue from oil sales and royalties are derived from crude oil production at the Stabroek Block. ExxonMobil, the operator, has a 45% stake, alongside Hess (30%) and CNOOC (25%).
About Guyana’s Oil Ledger
Guyana’s Oil Ledger offers analyses of the latest oil production data and government oil fund receipts, published typically on a fortnightly basis. The column is authored by Kemol King, a journalist specializing in Guyana’s oil and gas sector.
