With the aim of financing its accelerated transformation agenda, the Guyana Government will be moving to increase the amount of money it can withdraw annually from the Natural Resource Fund (NRF) – where the country’s earnings from the oil and gas sector is being held.
Back in December 2021, Government amended the NRF Act to bring greater transparency and accountability in the management of Guyana’s oil resources, including the requirement of Government to seek annual parliamentary approval for withdrawals from the NRF as stated in Section 19 of the NRF Act 2021.
Pursuant to that provision, as part of its consideration of the budget process, the Parliament approved a total of $208.9 billion (equivalent to US$1.002 billion) to be withdrawn from the NRF in 2023.
But during his presentation of the $1.146 trillion 2024 National Budget on Monday, Finance Minister, Dr Ashni Singh pointed to the need for an “optimal and dynamic financing mix”.
“Our Government will be proposing… a revision to the NRF withdrawal rule which, once approved, will result in an upward revision to the NRF withdrawal amount to take effect from this fiscal year. The revised withdrawal rule will retain the important feature that, as production and revenue ramp up further, an increasing share of the inflows into the NRF will be saved relative to the share transferred to the Consolidated Fund to finance national development priorities,” he explained.
According to the Finance Minister, this proposal will be placed before the National Assembly for consideration and approval.
The funds in the NRF have their origins in the oil-rich Stabroek Block offshore Guyana, where US oil major ExxonMobil and its partners – Hess Corporation and CNOOC – are producing light sweet crude using the Liza Destiny, Liza Unity, and more recently, the Prosperity Floating Production, Storage and Offloading (FPSO) vessels.
In 2022, for the first time, Guyana had used oil funds to finance a national budget. In fact, in 2022, the Government withdrew a total of $126 billion (US$607.6 million) in three tranches from the NRF which went towards financing Guyana’s national development plans.
In 2023, US$1002 million was withdrawn to finance national development priorities. The last withdrawal for last year, of eight in total, was made on December 27, 2023 from the NRF to the Consolidated Fund to the tune of US$152.1 million (equivalent to $31.6 billion).
According to Dr Singh, some US$1617 million in petroleum revenue was deposited into the Fund last year, and at the end of 2023, the overall balance, inclusive of interest income, stood at US$1973.5 million.
For 2023, the Fund received US$1398.9 million in profit oil, that is, US$576.6 million from Liza Destiny and US$822.3 million from Liza Unity. With respect to royalty payments, some US$218.1 million was received from the Stabroek Block operator.
These earnings stemmed from the 142 lifts of crude oil from Guyana’s three producing FPSOs last year. Of those lifts, 17 were Government’s entitlements – six from the Liza Destiny FPSO and 11 from the Liza Unity FPSO.
“The profit oil receipts received in 2023 correspond to two lifts that occurred in the last quarter of 2022, and 15 Government lifts that occurred in 2023. Two receipts related to 2023 are anticipated to be made this month, with respect to lifts that occurred in December 2023,” the Minister explained.
In 2024, Dr Singh revealed, some 202 lifts of crude oil are projected from the three FPSOs in Stabroek Block. Again, 25 of those lifts are estimated for Government.
Consequently, earnings from the Government’s share of profit oil in 2024 are estimated at US$2078.9 million, while royalty payments for this year are projected at US$319.9 million.
Additionally, based on 2023 deposits, an estimated US$1154.3 million or $240.1 billion can be withdrawn from the NRF in 2024 and transferred to the Consolidated Fund to support the country’s development agenda.
The $1.146 trillion 2024 Budget is financed with a $240.1 billion transfer from the NRF to the Consolidated Fund.
