Guyana expects US$957.6 million in oil revenues in 2022

Given the ramp-up in oil production expected in 2022, Guyana expects that its Natural Resource Fund will receive nearly US$1 billion in 2022.

This was related to the National Assembly by Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh during his Budget 2022 address.

Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh, M.P.

“It is estimated that deposits into the NRF for 2022 will total US$957.6 million, comprising some US$857.1 million earned from the Government lifts of profit oil, and an additional US$100.5 million from royalties.”

In comparison, as Dr. Singh related, the Fund received US $607.6 million in the period since the beginning of oil production in December 2019, up to the end of 2021.

Disaggregated, this represents US$185.4 million from four lifts of profit oil and US$12.9 million from royalties for the period March 2020 to December 2020; and in 2021, US$357.2 million from government’s share of profit oil, and US$52 million from royalties.

Dr. Singh said “with two FPSO vessels expected to be in operation this year, it is anticipated that there will be 94 lifts from the Stabroek Block, 13 of which will be Government lifts.”

This represents more oil lifts than were made in the 2-year period since oil production began in December 2019 to the end of 2021. As Dr. Singh related, that period saw 69 lifts being exported from Guyana, of which nine were for government, as per the production sharing agreement with ExxonMobil and its partners, Hess Corporation and CNOOC Limited.

The revenues which will be gained from oil production in 2022 will begin to refill the Natural Resource Fund, as the government intends to withdraw all revenues currently in the account, to partly finance Budget 2022.

“Budget 2022 is the first budget ever to benefit from withdrawals from the NRF, following the historic passage of the NRF Act last December which addressed the most offensive deficiencies of the predecessor Act,” Dr. Singh said.

“Pursuant to the provisions to the newly enhanced legal framework set out in the new NRF Act, Budget 2022 projects a withdrawal from the NRF and transfer to the Consolidated Fund of $126.7 billion.”

The minister explained that this will ensure the government’s accelerated development agenda, with all its critical proposed investments and measures, can be financed without excessive borrowing or reliance on the introduction of new taxes.

Moving forward, the Natural Resource Fund Act benefits from a reformation due to the new Natural Resource Fund Act 2021, which corrects a number of deficiencies which were legislated by the previous administration. The new legislative framework will promote prudent and transparent management of the nation’s oil revenues.

Inflows to the Fund are expected to increase even more in the coming years, as ExxonMobil operationalises several other production operations. Dr. Singh related that up to six projects could be in operation by 2026, with production about 1 million barrels of oil per day. This would represent a near quadrupling of the expected oil production for 2022, and a resultant significant increase in revenues.