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Govt. cautious of using oil revenue to support budget – Jagdeo
…as Mid-Year Report predicts lower earnings
Kaieteur News – Vice President Bharrat Jagdeo has assured that the Government of Guyana (GoG) is cautious of utilizing the revenue stream from its nascent oil and gas sector to fund the country’s national budget, amid falling global market prices for the resource.
Vice President, Bharrat Jagdeo
During a party press conference at the People’s Progressive Party Civic’s (PPP/C’s) head office on Robb Street, Georgetown on Thursday, the General Secretary, a former Finance Minister explained that while Kaieteur News reported the anticipated decline in expected revenue, it is important to note that this is normal.
In its Monday edition last week, this publication reported that petroleum deposits for the year are now projected to total US$1,629.3 million, compared with US$1,631.7 million projected at the beginning of the year. This means that the country will receive US$2.4 million less than anticipated or approximately GYD$480M.
To this end, Jagdeo said, “It’s nothing, it’s just the prices will come and go up like that. If prices globally fall, now they are on the rise again, so the numbers we put in the Budget, if we sell now, because of growing oil prices, the figure will be higher than before, but notwithstanding what I just mentioned, we had cautioned this- even ourselves.”
The former Head of State noted that he has on numerous occasions addressed the need for Guyana to be cautious of the dreaded Dutch disease, overheating of the economy and being cautious of the years to come by not crafting the budget based on revenue that may decline due to lower oil prices, climate change and net zero measures stepping in.
According to the Ministry of Finance Mid-Year Report, government is now projected to earn US$1,410 million from the sale of Guyana’s share of profit oil, and another US$219.3 million in royalties. The Natural Resource Fund (NRF) or the oil account’s closing balance at the end of the year has been revised to approximately US$2 billion by the Ministry of Finance.
Kaieteur News had reported in an earlier article that the plummeting oil price on the global market can be dangerous for newcomer to the sector, Guyana, especially as oil major, ExxonMobil continue to pump billions of US-dollars to develop the resources discovered in the Stabroek block. The country can easily find itself unable to repay the investments or enjoy profits from the industry should this trend extend.
Despite the shift to renewables and the consequent oil price volatility, the government has been ramping up not only exploration activities but production as well to avoid stranded resources.
Presently, oil is being produced from two active projects, the Liza One and Liza Two in the Stabroek Block, operated by ExxonMobil Guyana Limited (EMGL). The company is expected to start up its third development, Payara before the end of this year.
EMGL has since received regulatory approval for five deep water projects in the oil rich acreage, with a sixth application pending and preparation ongoing for a seventh.
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