Wednesday, September 27, 2023

Guyana’s 2022 crude output valued at US$9.3 billion

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The International Monetary Fund (IMF) has projected the total value of crude produced in the Stabroek Block this year at US$9.33 billion. This accounts for 93.4 million barrels of expected production, at an average price of US$99.90 per barrel.

Guyana’s profit oil take will roughly align with that of the combined Stabroek Block group, as per the 50/50 split stipulated by the Production Sharing Agreement (PSA).

The IMF recognised Guyana’s commitment to transparency and accountability in the management of its oil funds, as evidenced by the new Natural Resource Fund (NRF) legislation.

In its latest economic review of Guyana, the IMF said the 2021 legislation, when compared to the 2019 document, removes extensive powers from the Minister of Finance and vests them in a new Board of Directors.

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The law, it said, also proposes a much simpler and clearer formula to calculate how much can be withdrawn from the Fund for government expenditures. It explained that the formula allows the administration to draw down US$600 million this year. Thereafter, the proposed legislation sets out a ceiling on withdrawals, with a progressively smaller proportion of the balance in the NRF being allowed to be transferred to the budget for public spending, and the remainder of the petroleum revenues is accumulated as savings in the NRF.

The IMF said law also replaces the 22-member Public Accountability and Oversight Committee with a new 9- member committee. The new committee is designed to establish practical and effective nongovernmental oversight over the management and use of the nation’s oil resources.

The Fund also noted that the law requires all reports and receipts of petroleum revenues to be published in the Official Gazette. Failure to comply with this obligation results in a harsher penalty of GY$5 million and ten years of prison time.

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Finally, a key amendment in the legislation is that the Minister of Finance could face up to 10 years imprisonment if he fails to disclose the receipt of any petroleum revenues received by Government in the Official Gazette within three months of receipt of such monies.

The financial institution said these features of the law are central to good governance.

For the time being, the IMF predicts Guyana’s NRF deposits will grow to US$21.14 billion in 2027. While it lauds the government’s approach towards addressing fundamental needs in the health, education, and services sector, it has cautioned that there be prudent monitoring of expenditure.

The government, in response, has said it has no intention of doing otherwise.

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