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Guyana needs robust institutions, transparent regulatory practices if citizens are to benefit from oil wealth – Rystad Energy
Kaieteur News – Guyana’s significant oil and gas resources have resulted in international bodies as well as local officials labelling the country as the fastest growing economy in the world.
President Irfaan Ali
In a recent press statement Norwegian group, Rystad Energy highlighted that Guyana has entered the big league as oil and gas revenues break US$1 billion this year and is expected to grow to US$7.5 billion in 2030. Rystad Energy is an independent energy research and business intelligence company that provides data, tools, analytics, and consultancy services to the global energy industry.
Guyana’s positioning as the fastest growing economy in the world is mainly attributed to the significant number of finds by American oil giant, ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), on the prolific Stabroek Block, which spans more than six million acres in the country’s Exclusive Economic Zone (EEZ).
EEPGL is the operator of the country’s richest oil block, which is estimated to hold nearly 11 billion barrels of equivalent of oil (beo). With two oil ships, namely the Liza Destiny and the Liza Unity in operation and producing approximately 360,000 barrels a day, Guyana’s growth rate is forecast to jump beyond the projected 49 percent stated by the World Bank.
Vice President, Bharrat Jagdeo.
Rystad reported that powered by the Stabroek Block government revenue from domestic production is on track to break the $1 billion mark this year. “Low break evens and below-average emissions intensity in the Stabroek will propel Guyana from a relatively small producer to a global leader in the coming years, solidifying the country’s position as a competitive and policy-friendly player for offshore production,” the Norwegian group reported.
According to Rystad the Guyana’s take (royalties, profit sharing and taxes) from production is expected to increase until 2025, reaching US$4.5billion annually. Notably, it was stated that triggered by a forecasted drop in oil prices and continued spending on the field’s development – the country’s revenue will fall to US$2.8 billion in 2027.
It was also stated that production growth is set to accelerate with the revenue momentum resuming as new pre-Final Investment Decision (FID) projects are sanctioned and brought online, leading to peak government revenues of US$16 billion in 2036. Also, Rystad stated that the recent spate of prolific discoveries and the steady pace of FIDs position Guyana to reap the rewards of these finds with cumulative revenues totaling US$157 billion by 2040.
Guyana is forecast to produce 1.7 million barrels per day (bpd) of oil by 2035 – not accounting for as-yet undiscovered volumes – propelling the country to the fourth position on the list of the largest global offshore oil producers, leapfrogging the US, Mexico and Norway.
Importantly, after highlighting the revenues that can be generated from Guyana’s bountiful of oil and gas resources, Rystad Energy pointed to the fact that all may not be plain sailing.
In fact, the Norwegian group said, “Strong institutional governance, transparency and regulatory practices will be vital to unlocking the full potential of Guyana’s resource wealth for its society.”
According to Rystad, although the government has taken steps to improve governance, including establishing a sovereign wealth fund and improving fiscal policy transparency, there are still improvements to be made. For instance, the Extractives Industries Transparency Initiative (EITI), which champions strong resource management and governance practices recently found several weaknesses in Guyana’s company reporting and tax processes.
Moreover, earlier this year, international lawyer Melinda Janki during an interview with this publication had cited the need for Guyana to do better on this front. Janki categorically stated that the country needs stronger rules to guarantee transparency, accountability, impartiality, and independence in Guyana’s oil and gas sector.
She had even called on citizens to defend grave financial and economic threats that are posed by the country’s exploitive and abusive contract.
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