With Guyana expected to produce over one million barrels of oil per day from six floating, production, storage and offloading (FPSO) vessels by 2027, the country will likely have enough money to clear its debt. This is according to Vice President Bharrat Jagdeo.
Those six FPSOs would produce crude discovered by an ExxonMobil-led consortium in the Stabroek block. On November 14, Guyana welcomed the start-up of Prosperity, the third FPSO that joins the Liza Destiny and Unity ships. Destiny and Unity have kept, for the most part, a steady production output of about 400,000 barrels. From Destiny and Unity alone, Guyana has earned over US$3 billion.
Once Prosperity reaches nameplate capacity by the first quarter of 2024, taking the total output to more than 600,000 barrels, Guyanese authorities are projected to rake in even more oil revenues.
Thus far, the Guyana government has been able to use a portion of the oil income to fund major developments in health, education, infrastructure, agriculture, energy sustainability and tourism.
Guyana’s Vice President recently told local media operatives that more revenues are expected to build up in the later years when six oil projects are working simultaneously. He explained that the absence of ring-fencing provisions in the Stabroek Block Production Sharing Agreement (PSA) allows ExxonMobil and its partners, to take some of the profits to fast-track the development of other projects within the block.
While those very profits could be split with Guyana now, the Vice President previously explained that the existing approach allows Exxon to have more cash on hand to speed up exploration and ramp up production of other projects thereby making more revenues available for the country’s Natural Resource Fund (NRF).
In light of this policy position, Jagdeo predicts Guyana could, by the 2027 period, be able to use a single year’s revenue to clear its debt.
The Vice President said, “…a lot more revenue will come in the outer years of our production. So 2027 going up, you will have larger sums of money. With a single year’s revenue in 2027, we will be able to pay off all of our debt which is an unusual thing for a country.”
Jagdeo also noted that Guyana currently has one of the best debt profiles in the world, and vowed that this status will be maintained. He recalled that before 2015, debt accounted for 45% of the Gross Domestic Product (GDP). “Today, it is about 22% of GDP, making it one of the lowest figures in the world. So we are using one of the smallest amounts of our revenue to service that. On the other hand, we have those in the region who are using over 60% of their revenue to service debt,” the official underscored.
The Vice President said being a prudent debt manager remains a critical component of his government’s agenda.