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Guyana’s oil account gets US$604.3M top up in first quarter
– payments represent sales from 2023 fourth quarter
Kaieteur News – The Natural Resource Fund (NRF) received US$604.3M during the first three months of 2024.
BoG
According to a Gazetted Order, published on March 28, 2024, the country was paid for seven lifts and one royalty payment, relative to the fourth quarter of 2023. The deposits were made during the period January 1, 2024 and March 28, 2024.
In accordance with the fiscal provisions of the 2016 Petroleum Agreement, Guyana receives 2% royalty and 50% of the profits, after the Contractor deducts 75% of the monthly earnings to repay its investments (cost recovery).
The Ministry of Finance reported that two of the profit oil payments related to lifts from the third Floating Production Storage and Offloading vessel (FPSO)- Prosperity- which commenced oil production in November 2023.
The NRF Act of 2021 mandates the Minister of Finance to report receipts of all petroleum revenues paid to the oil account.
This year, Guyana is expected to receive US$2.1B in oil revenues. Out of 202 projected lifts of crude, Guyana will get 25. With each lift being approximately one million barrels, Guyana’s entitlement this year is 25 million barrels of crude. Each lift will be marketed and sold by Guyana’s hired marketers, and the funds will be deposited into the Natural Resource Fund.
In addition to profit oil, the oil companies are mandated to pay Guyana royalties of 2% of the crude produced and sold. Government expects US$320M in royalties this year. Added to the profit oil export earnings, Guyana would be making about US$2.4B from oil production in 2024 – a figure that will pale in comparison to the massive earnings of ExxonMobil and its co-venturers in the Stabroek Block.
Currently, three projects- Liza One, Liza Two and Payara- are producing approximately 640,000 barrels of oil per day (BPD) in the Stabroek Block. ExxonMobil Guyana Limited (EMGL), the operator of the Block has ramped up production beyond the design capacity of the Liza Destiny, Guyana’s first FPSO. The vessel was designed to safely operate at 120,000 bpd however it is now producing over 160,000 bpd according to the most recent statistics on the Ministry of Natural Resources website.
ExxonMobil also plans to carry out debottlenecking on the Liza Unity, the country’s second FPSO, to allow the vessel to produce above the designed capacity of 250,000 bpd.
Vice President Bharrat Jagdeo’s position is that the country’s oil resources should be produced as quickly as possible. Jagdeo’s personal depletion policy, aptly encapsulated by the phrase “drill baby drill!” has become the guiding principle of the government’s management of the petroleum sector. The Vice President has said that demand for fossil fuels is either going to be static or declining in the next 15 to 20 years due to the implications of climate change and the global transition to cleaner energy sources. However, he believes that Guyana has a window of opportunity to extract its oil resources before demand starts to decline, and this is why he wants to extract the oil as quickly as possible.
Even as production activities scale up, stakeholders worry that the country may be at grave financial risk should an oil spill occur since the country does have a full parent company guarantee from ExxonMobil to cover these costs. Instead, the oil giant’s subsidiary, EMGL has lodged a US$2B guarantee and committed a US$600M insurance for each spill occurrence.
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