By: Jarryl Bryan
As of October 31, 2022, Guyana had in excess of $252 billion in oil revenues sitting in the Natural Resource Fund (NRF) – a combination of money earned from profit oil and royalties since oil production began in 2019.
According to the latest monthly financial report from the Bank of Guyana (BoG), the fund had an opening balance of $219.1 billion at the start of October and a closing balance of $252.3 billion at the end of the month.
There were no withdrawals from the fund to the Consolidated Fund for the month. Instead, revenue came in from royalties ($13.9 billion) and profit from oil ($18.5 billion). When it comes to investment, there was $621 million in interest income.
The third quarter of this year – July to September – was one of the most lucrative quarters yet for Guyana’s oil earnings, with inflows of over $100 billion being recorded entering the Natural Resource Fund.
According to the Bank of Guyana in its quarterly report for the third quarter of 2022, Guyana earned a total of $102.8 billion (US$493.1 million). This includes profit oil of $92.1 billion (US$442.1 million) and royalties of $10.6 billion (US$51 million).
The increase was attributed by the Bank to the additional Floating Production Storage and Offloading (FPSO) vessel, the Liza Unity, being in operation in the Liza Phase Two of the Stabroek Block.
“These funds were deposited into the Natural Resource Fund Account held at the Federal Reserve Bank of New York. As a result of an additional FPSO being in operation, more lifts were made and hence, more profit oil received compared to previous quarters,” it said.
It was explained that since oil production began in 2019, there have been 16 lifts of profit oil which have brought in $269.3 billion (US$1.2 billion) in profit oil revenue and $31.9 billion (US$153.1 million) in royalty payments.
“Over the quarter the Federal Reserve increased its target range for the federal funds rate twice moving it from 1.5 per cent – 1.75 per cent to 2.25 per cent – 2.5 per cent and then again to 3 per cent – 3.25 per cent,” the bank further explained.
“As a result of these increases which caused interest rates on overnight deposits to rise significantly, and a higher account balance, the fund continued to earn a higher level of interest income on its overnight deposits than previous quarters.”
The fund currently has in place a Board, as well as the Public Accountability and Oversight Committee and the Investment Committee, which have been appointed by President Dr Irfaan Ali in accordance with the law.
The Natural Resource Fund Board is being chaired by Major General (Retired) Joe Singh. Other members are Guyana’s Permanent Representative to the United Nations, Carolyn Rodrigues-Birkett; former MP for the People’s National Congress Reform (PNCR), Dunstan Barrow; longstanding executive of the Private Sector Commission (PSC), Ramesh Dookhoo; and former CDB President, Professor Compton Bourne. These appointees will serve for a period of two years.
The Public Accountability and Oversight Committee is meanwhile chaired by former Commissioner General of the Guyana Revenue Authority (GRA), Clement Sealey.
The other six members are Wendell Jeffrey, Abu Zaman, Ryan Alexander, Dawn Gardener, Teni Housty, and Aslim Singh. When it comes to the Investment Committee, it is chaired by Shaleeza Shaw, who was sworn in back in August along with members Michael Monroe and Richard Rambarran.
The Stabroek Block is 6.6 million acres (26,800 square kilometres). Exxon, through its local affiliate Esso Exploration and Production Guyana Ltd (EEPGL), is the operator and holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
The company is currently undertaking four production projects – Liza 1, Liza 2, Payara, and Yellowtail in the oil-rich block. It is estimated that when the Yellowtail development project comes on stream, production will climb to 810,000 bpd by 2027. The US oil major anticipates at least six FPSOs in operation by 2030.
