Natural Resources Shadow Minister, David Patterson has accused the government of mismanaging and squandering Guyana’s oil revenues on infrastructure without ramping up the country’s human resources.
He made these remarks at a conference held at Capitol Hill, Washington DC, USA, which touched on myriad issues affecting the Guyanese society. “What has clearly happened is that we are getting all of this money and the government is squandering it,” Patterson declared.
The Alliance for Change executive member contended that the People’s Progressive Party must develop a people-centred economy as to date many public servants are surviving on paltry wages and salaries when the oil economy is clearly booming.
According to the Member of Parliament, it is appalling that the country’s oil and gas sectors are projected to grow by 39.6 % in 2023 and many Guyanese are not benefitting equitably from the revenues generated from daily oil production. “No effort has been made by the government to put more monies into the pockets of the public servants considering the fact that the costs of living are high and inflation rates are uncontrollable.
He also informed several participants at the Conference of the Congressional Black Caucus about ExxonMobil’s unauthorised discussions with Ministry of Natural Resources staff that led to a reduction in a disputed oil audit figure from US$214 million to a mere US$3 million.
Recently President Irfaan Ali ordered that an investigation be swiftly conducted to determine who authorised personnel at the Ministry of Natural Resources to bypass advice from the Guyana Revenue Authority (GRA) and enter into direct negotiations with ExxonMobil to reduce US$214 million in questionable claims flagged by IHS Markit to US$3 million.
This was announced by Vice President Bharrat Jagdeo at a press conference where he detailed that he and President Ali agreed that there should be “a full investigation of this matter and the Minister [of Natural Resources] still has to give a full report to the cabinet on what took place.”
Though the Shadow Resources Minister did not go into great detail regarding the subject, he asserted that the “government has been playing games when it comes to accountability and transparency of the sector and has now landed itself in a serious situation with Exxon.”
Economist and member of the PNCR Elson Lowe alleged that corruption, inequity and mismanagement of the country’s oil resources are the known hallmarks of the government and the hullabaloo over Exxon’s disputed $214 million of audited figures came as no surprise. According to the economist, the government initially has been acting surreptitiously and ineffectively in relation to the auditing process.
“Mr Vincent Adams raised issues about the oil audits and the potential millions of dollars that would go missing, and now we see that this is just one of the examples of the PPP’s lack of accountability and transparency especially in the oil and gas sector,” Lowe told the conference.
“We as the opposition over the past few years had to be raising issues to prevent potential crises in the oil and gas sector, because we realise that there is lack of accountability and transparency,” he added.
Like Patterson, Lowe said that the incumbent administration was poorly managing the country’s oil and gas sector and was allegedly involved in “squandermania.”
According to the Ministry of Finance’s 2023 mid-year report, the oil and gas sectors are projected to grow by 39.6 % as the floating production and storage offloading (FPSO) vessel, Prosperity, is expected to come onstream during the final quarter.
Last year’s estimation stood at 98.4% in the first half of the year. At the end of June, total crude oil production stood at 68.7 million barrels, compared with 34.6 million barrels in the same period of last year. Production from the first phase of the Liza field, located in the Stabroek Block, was expected to reach full capacity of 120,000 barrels of oil per day in coming months, and the first cargo was set to be sold within several weeks, ExxonMobil had said back in 2019.
The Liza Unity FPSO, however, produced first oil on February 11, 2022, and, in the first half of this year, ramped up to a production rate of approximately 227,000 barrels per day. And on the production front, the sector experienced a rapid expansion in output from both producing FPSOs, when compared with the first half of last year, with ramped up output amid optimisation and maintenance scopes.
As previously mentioned, the Liza Destiny FPSO produced at almost 153,000 barrels per day (bpd), on average, in the first half of 2023, compared with approximately 109,348 bpd last year. Noteworthy is the fact that this platform recently underwent additional optimisation works, with plans in place to ramp-up production further.
As it relates to the Liza Unity FPSO, production of crude oil averaged 226,500 bpd in the first half of this year, compared with 105,948 bpd from February 11 to June 30, 2022. Similarly, this platform underwent its first phase of optimisation scope, with a ramp-up to 255,000 bpd expected in the second half of the year.
The vessel arrived in Guyana’s waters in April 2023. With these three production vessels, Guyana’s production capacity will be over 560,000 bpd.
Additionally, there was also the approval of the Uaru Field Development Plan (FDP) and issuance of the petroleum production licence in April 2023. Additionally, the government participated in two pre-FDP engagements on Whiptail, the sixth project, in April 2023 and June 2023, respectively. The project’s FDP submission to the government for review is anticipated for this month. Lastly, in June 2023, appraisal work commenced and is ongoing to define the seventh project in the Stabroek Block.
The Yellowtail development which involves a fourth FPSO vessel named One Guyana is dubbed the largest project with a targeted production of 250,000 barrels per day which is earmarked to begin in 2025.
In the first half of the year, there were eight lifts of profit oil from the two producing FPSOs, Liza Destiny (3) and Liza Unity (5), as projected. During the period January to June 2023, the government earned US$705.2 million as revenue from its share of profit oil from two lifts that occurred in the final quarter of 2022, and seven of the eight lifts that occurred in the first six months of the year. The government also earned US$110.8 million in royalties related to 2022Q4 and 2023Q1 production and sales. In July, US$73.8 million was received as a profit oil payment for the government lift executed in June.
The cumulative balance, inclusive of interest income of US$35.6 million, at the end of June was US$1,723.5 million, after withdrawals of US$200 million each in the months of February and May. However, with the price of crude oil declining amid demand-side concerns and financial market disruptions that threaten a global slowdown in economic activity, the forecast for NRF deposits has been marginally downgraded. Petroleum deposits for the year are now projected to total US$1,629.3 million, compared with US$1,631.7 million projected at the beginning of the year.
The government has now projected to earn US$1,410 million from the sales of Guyana’s share of profit oil, and US$219.3 million in royalties. It is anticipated that at the end of the year, the NRF’s closing balance will stand at approximately US$2 billion.
