Guyana’s Natural Resource Fund (NRF) has been lauded as one of the most transparent in the world, by the President of ExxonMobil subsidiary Esso Exploration and Production Guyana Limited (EEPGL) Alistair Routledge.
During a recent University of London Chancellor Hall seminar that brought together experts and stakeholders to discuss the country’s oil and gas industry, Routledge made a presentation in which he had high praise for the NRF, which is the repository of Guyana’s oil wealth.
“Already through the middle of this year, oil production has delivered over US$2.6 billion into the Natural Resource Fund. A Resource Fund that is actually one of the best in the world, in terms of transparency,” Routledge explained.
“There are many countries around the world that have established Natural Resource Funds or Sovereign Wealth Funds. But oftentimes the transparency between total revenue from the industry, whether its mining or oil and gas and what ends up in the Natural Resource Fund, is not always clear.”
Guyana, with US oil giant ExxonMobil as the operator, began producing oil from the Liza Phase One project on December 20, 2019, in the Stabroek Block. It is, in fact, the only oil company in Guyana that, as the operator, has started oil production. Routledge said this puts the company in a unique position.
“I can assure you in this case, because we are the only operator, we know what the revenues are from our industry, that everything being generated for the country is going into that fund,” the executive said.
“So, I think that is the first step in transparency and ensuring that the people of Guyana can benefit from the resources. Of course, then, it’s up to the elected Government to appropriate that through the Parliament, into projects for the country. And they’ve started to do that.”
Exxon, through its local subsidiary EEPGL, is the operator of and holds 45 per cent interest in the Stabroek Block. Exxon’s remaining co-venture partners in the Stabroek Block are CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of Chinese company CNOOC Limited that holds a 25 per cent interest in the Exxon-administered Stabroek Block, and Hess Guyana Exploration Ltd, which holds 30 per cent interest.
Guyana is, in 2023, expected to earn a total of US$1.6 billion in profit oil and royalties combined, buoyed by the startup of ExxonMobil’s third development in the Stabroek Block – the Payara development – before the end of the year.
In January of this year, the Bank of Guyana signed an agreement to officially hand over control of the NRF to the Board of Directors appointed by the President. According to Section 5 (6) (d) of the NRF Act, the Board is required to enter into an operational agreement with the Bank, so that management of the Fund can change hands. This agreement was signed two days after the reading of the 2023 budget.
The NRF Board consists of five members, while the Public Accountability and Oversight Committee (PAOC) is comprised of nine members, and the Investment Committee, seven members. When it comes to the NRF Board, it is Chaired by retired Major General Joe Singh.
Other members of the Board are Guyana’s Permanent Representative to the United Nations, Carolyn Rodrigues-Birkett; Private Sector Executive Ramesh Dookhoo; former People’s National Congress (PNC) parliamentarian Dunstan Barrow; and former Chancellor of the University of Guyana, Professor Compton Bourne.
Whenever monies are to be used from the fund, those sums must first be budgeted for and a financial paper approved in the National Assembly. After the amounts are examined by the NRF Board, the monies are transferred to the Consolidated Fund for use in the budget.
In May, the Government made its second withdrawal from the NRF for 2023, intended to fund programmes under this year’s $781.9 billion budget. Minister of Finance, Dr Ashni Singh had announced the withdrawal of US$200 million ($41.6 billion) from the fund. He had assured that, in accordance with the law, this sum would be transferred to the Consolidated Fund.
Previously, the first withdrawal for this year was made in February. In December 2022, the Government had made its third overall withdrawal for that year — US$207.6 million (G$43 billion) in oil funds — from the fund, which went towards financing Guyana’s national development plans. This had brought the accumulated withdrawals from the NRF for the year 2022 to US$607.6 million, equivalent to G$126 billion, in line with the approved amount in the 2022 budget.
While safeguards exist, Vice President Bharrat Jagdeo has already signalled the Government’s intention to further strengthen the management capabilities of NRF, even with the improvements that have already been made to the fund’s management by the People’s Progressive Party/Civic (PPP/C). This is particularly important as the monies received from oil and gas continue to grow each year.
