‘Despite challenges, natural resources saw positive growth in 2021’ – Minister Bharrat

– More transformative projects in store for 2022

The shocks of the COVID-19 pandemic, compounded with the unprecedented nationwide flooding of May-July, proved to be major challenges for Guyana’s natural resources sector. But despite the tribulations and effects of these natural phenomena, the country’s natural resources sector – namely forestry, mining and oil and gas – still saw and obtained positive growth for 2021.

Forestry

When the PPP/C administration assumed government in 2020, it was discovered that the forestry sector was grossly mismanaged and on the verge of collapse. As a result, the government was forced to plug $350 million into the Guyana Forestry Commission (GFC) to cover operational costs and wages for the remainder of 2020. At the time, the Minister of Natural Resources, Vickram Bharrat, M.P., had engaged with the commission and other stakeholders within the sector to examine strategies, which could enhance the financial performance and management capabilities of the entity.

As a fruit of such labour, in 2021, the forestry sector was able to make a positive turnover and manage on its own. For starters, this sector was able to:

• Get stakeholders, particularly small-scale loggers back into the business;
• As a result of this and the construction boom, logging production was increased, with over 400,000 cubic feet declared;
• GFC’s monthly revenue collection was increased from $70 million in 2019 to over $90 million;
• Over 100 new concessions were issued to small loggers;
• Monitoring capabilities were advanced with the procurement of more off-terrain vehicles to venture into the hinterland for exercises;
• Over $3 billion was spent to rehabilitate and construct hinterland roads in Regions One, Two, Eight, Nine and Ten.

In an interview with the Department of Public Information in late December, Minister Bharrat shared that there is space for increased log production, particularly amongst large concessionaires. Against this, he said that his ministry intends to hold more consultations with the larger companies in order for them to reach their targets.

“Their production was very low when compared to the small loggers. This is an area we will address in 2022. We can’t have people holding up state land. There is so much room for increased production. That is not a question that stakeholders should be worried about,” the Minister said.

Mining

Like forestry, the mining sector was hit by the pandemic, but there were tax reliefs placed in the 2020 emergency budget such as the removal of Value Added Tax (VAT) on machinery, equipment, and hinterland travel. This provided much-needed stimulation as the government worked on the phased reopening of the economy and stayed true to the government’s manifesto promise to remove obstacles to the sector’s development.

Due to these interventions, the minister shared that gold production increased and that the sector continues to remain very lucrative. He added too, that this positivity is a result of high gold prices. Some notable achievements of the mining sector in 2021 include:

• Significant increase in small and medium-scale mining;
• Over 600,000 ounces of gold produced;
• The Guyana Geology and Mines Commission (GGMC) held a mining lottery which awarded over 200 mining blocks to small-scale miners;
• As a result of the construction boom, sand and loam are in high demand, leading to a momentous increase in production;
• Over 900,000 tonnes of aggregates were produced;
• Diamond production increased from 19,000 karats to over 40,000 karats;
• The government has increased the capabilities of GGMC to conduct certification of diamonds in line with international protocols;
• GGMC commenced work on upgrading and adopting where applicable, ICT programmes in key divisions, such as the Land Management and Mines Divisions, to promote transparency and increase efficiency within its system;
• The government also ensured active monitoring to ensure adherence to COVID-19 protocols in mining areas in Regions One, Seven, Eight and Nine.

One road critical to the ease of travel in the hinterland region for both the forestry and mining sectors is the rehabilitation of the Kartabo-Puruni Road and the construction of a bridge at the Puruni river crossing. The Puruni River is a tributary of the Mazaruni River.

The Natural Resources Minister indicated that in 2022, the government will be focusing heavily on the completion of the Puruni Road and bridge. 

Oil and Gas

For Guyana’s oil and gas sector, 2021 proved to be a successful year. The staunch leadership of His Excellency Dr. Mohamed Irfaan Ali has resulted in Guyana benefitting from billions of dollars in revenue, investment and massive, transformative opportunities for Guyanese businesses.

Attaining such positive welfare for the country and its citizens was not an easy feat – especially when one recalls that when the (PPP/C) assumed the government, the oil and gas sector was bereft of mechanisms to ensure maximum benefits and prospects for Guyanese. This mismanagement was a consequence of the former APNU+AFC administration, despite the fact that that administration had five years to prepare for first oil. 

In stark contrast, the PPP/C government has committed to prudently, transparently and accountably managing Guyana’s oil and gas sector. It is making good on this promise. Massive legislative and technical reforms were implemented last year. Some specific achievements made under the Ali-led government in Guyana’s oil and gas sector in 2021 include:

• The passing of local content legislation. With this legal mechanism, businesses can secure $400M-$500M annually from local content revenues;
• An amended Environmental Permit for ExxonMobil’s offshore operations;
• The implementation of a flaring fee of US$30 per tonne CO2 emitted. The fee was later increased to US$45 per tonne;
• The Environmental Protection Agency (EPA) collected GY$900 million in fees from Exxon for its natural gas flaring;
• Signing of a Memorandum of Understanding to enable enhanced oil and gas relations between Guyana and Ghana;
• Amendments to the Petroleum Act to provide a framework for laying of the onshore pipeline for gas-to-shore, and or fibre optic cable;
• The initiation of the procurement process for the creation of a beneficial ownership register. This will serve to prevent corruption in the industry;
• The government has invited interested parties to invest in its US$900 million gas-to-energy project in the Wales Development Zone (WDZ);
• Technical training scholarships are being offered through the government to equip Guyanese with oil and gas training.

The year has barely begun, and already two new oil discoveries (Fangtooth-1 and Lau Lau-1) have been hit in the lucrative Stabroek Block. These bring total commercial finds to 26.

“Government of Guyana remains confident that these two additional discoveries… will further strengthen Guyana’s position as a country with world-class discoveries of high-quality hydrocarbon.

The Government will continue engaging all stakeholders towards the exponential development of these resources for all Guyanese while maintaining a social, economic, and environmental balance. In addition, the Government of Guyana is continually examining possibilities to strengthen oversight and management of the exploration programmes of all operators to further expand the sector through commercial discoveries,” Minister Bharrat outlined.

In 2022, we will see the implementation of critical mechanisms like the local content legislation. In addition to this, Guyana and its citizens will see the start-up of production in the Liza Phase Two development offshore. This will raise Guyana’s daily production of oil to well over 300,000 barrels per day. The Liza Unity FPSO is on track to commence production in early 2022, while the Prosperity FPSO vessel for the Payara field is undergoing construction in Singapore for a planned production start-up date in 2024.

In the third quarter of this year, the government will auction off oil blocks offshore Guyana. This is in keeping with the PPP/C government’s commitment to securing maximum benefits from the oil and gas sector for Guyana and its people.