The government estimates that the oil and gas sector expanded by 124.8 percent last year and should continue on this path in 2023 with the addition of the Prosperity Floating Production Storage and Offloading (FPSO) oil platform.
According to the Minister of Finance Dr Ashni Singh, a total of 101.4 million barrels of oil was produced in 2022 compared with 42.7 million in 2021. “This performance is attributed to the commencement of production on our country’s second floating, production, storage and offloading (FPSO) vessel – Liza Unity – early last year. In 2022, the Liza Destiny FPSO produced crude oil at an average rate of approximately 128,000 barrels per day (bpd), compared with 117,000 bpd in 2021, and the Liza Unity FPSO produced at an average rate of about 169,000 bpd, reaching a peak monthly rate of just over 233,000 bpd in December,” he explained.
Last year, there were 102 lifts of crude oil from Guyana’s FPSOs, 13 of which were for Government.
According to Singh, the Natural Resource Fund (NRF) received US$1,099.1 million in profit oil, US$510.2 million from Liza Destiny and US$588.9 million from Liza Unity in 2022. He added that the profit oil receipts received in 2022 correspond to 11 Government lifts, as the remaining two will be received this month.
Further, he said, US$155.2 million was received in royalty payments from the only producing operator – Esso Exploration and Production Guyana Limited (EEPGL), and that US$607.6 million was withdrawn to finance national development priorities in the 2022 Budget.
“At the end of 2022, the overall balance in the Fund, inclusive of interest income and after transfers to the budget, amounted to US$1,271.8 million,” Singh revealed.
He went on to say that the government expects that production will commence at a third FPSO – Liza Prosperity – by the end of this year, increasing production capacity to 560,000 barrels of oil per day.
He noted that in 2022 the government collaborated extensively with the Stabroek Block operator and its partners on the Yellowtail and Uaru projects resulting in the approval of production licence.
“These advancements are supporting a potentially earlier start-up in 2025, and will produce at a rate of 250,000 bpd. This will increase overall production capacity to approximately 810,000 bpd by 2025,” he said regarding Yellowtail, and added that the fifth development project – Uaru – once approved, will produce another 250,000 bpd following start-up in 2027.
“These will enable Guyana to generate just over 1 million bpd by this time,” he said.
As it relates to oil exploration activity, Singh said that 11 oil wells were drilled with the Stabroek Block accounting for ten. This has resulted in in 10 new commercially viable discoveries being made offshore Guyana. The total number of discoveries made in Stabroek is now 35, and a total of 40 for all blocks being explored.
“With the new discoveries in 2022, our total estimated proven reserves now stand at over 11 billion oil-equivalent barrels, with strong likelihood of upward revision as exploration activity continues,” he said.
Singh added that Licensing Round for oil exploration started in December last year and will run until April 14, 2023, with successful bids expected to be awarded by the end of the first half of the year. The round offers 14 blocks for tender in the shallow and deepwater areas of Guyana’s offshore area.
Exploration in the Kaieteur and Canje blocks continues.
Regarding the construction of an oil refinery near the Berbice River, Singh said that nine bids were submitted and are expected to be evaluated in the first quarter of this year. He noted that completion of the refinery in 2025 will allow for the local production of fuel and serve to strengthen Guyana’s and the region’s energy security.
The Finance Minister noted that one of the most important components of this sector is the gas reserve, which the government intends to exploit through the Gas-to-Energy project. As a result, the government has commenced work on the revision of the Liza Field Development Plan and Licence which will allow for the production of natural gas for commercial usage in Guyana.
“It is crucial to note that our gas reserves have expanded, with the estimated recoverable natural gas reserves moving from 16 trillion to over 17 trillion standard cubic feet. We are expected to export, at a minimum, about 50 million standard cubic feet of gas per day through Liza Destiny and Unity, in the initial phase, and, EEPGL, through the Yellowtail Production Licence, has submitted a Gas Utilisation Study for the remainder of Guyana’s gas reserves,” he disclosed, before adding that the government is currently reviewing this submission
He also noted that the government brought into operation the new NRF Act last year – which resulted in the appointment the NRF Board of Directors, Public Accountability and Oversight Committee, and Investment Committee. Singh added that since April 2022, notifications of receipts of petroleum revenues are being published in the Official Gazette and have been tabled in Parliament.
Singh did not mention or disclose any development pertaining to the Petroleum Commission.
Meanwhile, Singh said the new Local Content Act was also brought into operation last year, and a Local Content Secretariat (LCS) and Registrar established.
“The Register now includes over 500 Guyanese companies, and the Secretariat has approved over 29 five-year local content master plans to date. The latest available information shows that Guyanese accounted for 64 percent of total employment within the sector, totaling 3,153 at the end of the first half of 2022. Additionally, the LCS also successfully unbundled contracts and reduced the payment period for Guyanese suppliers from 45 to 30 days, particularly benefiting small Guyanese businesses,” he disclosed.
As it relates to the new fiscal framework intended to form the basis of a draft new model Production Sharing Agreement (PSA), he said this will be released in February.
“In addition to four areas of revised fiscal terms, Government will strengthen the articles related to work programme commitments by operators for each block, and put in place an enhanced relinquishment mechanism. The expectation is for the new model PSA to be applicable for awards by the end of the first half of this year,” he said.
