Govt. banking on high oil prices to rake in US$9B by 2027 - Jagdeo

Govt. banking on high oil prices to rake in US$9B by 2027 – Jagdeo

Mar 17, 2024 ExxonMobil, News, Oil & Gas

Kaieteur News – The Government of Guyana, adamant that it will not engage ExxonMobil for a better deal, and is banking on high oil prices to repay the operator of the Stabroek Block swiftly so that the country can enjoy a greater share of the profits.

Vice President, Dr. Bharrat Jagdeo

Vice President, Bharrat Jagdeo during his weekly press conference on Thursday explained that by 2027, Guyana is expected to produce 1.2 million barrels of oil per day (bpd).

He however pointed out, “If the price is $100 a barrel you will get more (than) if its $50, so you can play around with these numbers…but where it gets more difficult is when you look at the payback rate on the projects.”

The Vice President went on to remind that 75% of the monthly revenue is allocated to repaying the company’s investments. To this end, he said, “it will take a number of years to pay back if the oil price is $50 a barrel. If it goes up to $100 a barrel the pace of repaying is accelerated so it cuts the (timeline). If you had 10 years to repay the capital cost of the project, it comes down to five years to the extent that you repay faster, more revenue becomes available for distribution and so that is the model.”

Jagdeo was at the time responding to a question from this publication on when the country would receive US$9 billion from the oil sector, as revealed by him at his February 29, 2024 press engagement, hosted at Freedom House.

He said, “We believe that the revenue will start coming up steeply, so by 2027 or so we anticipate it will be close to about US$9 billion, up from just under US$2B.”

The chief policy maker for the sector reasoned that US$1.5B is about 20% of the country’s national budget, which means that revenue from the sector can fund the national budget by this time.

The former President was keen to note however, that while the oil revenue would be enough to fund the Budget, the provisions in the Natural Resource Fund (NRF) Act safeguards 90% of all revenues received above US$5B for savings.

Considering the volatility of oil prices and the global efforts to transition to renewable energy, citizens have been demanding that the government ring-fence the Stabroek Block projects to ensure the country benefits early on from the oil bonanza.

A ring-fencing provision would require each project to pay for itself and allow the country to benefit from 50% of all revenue generated, after the investment costs have been recovered.