During his budget speech yesterday, Minister of Finance Dr Ashni Singh said that the final ranking of bidders for a 30,000-barrel oil refinery in Berbice will be completed in the first quarter of this year.
Additionally, he said over 6,000 Guyanese are employed in the oil and gas sector.
In building a “world-class oil and gas sector” Singh stated that the government’s objectives are to strengthen the sector’s legal and regulatory framework, establish and strengthen institutional structures required by that framework, continue to promote accelerated exploration and production of the resources in the national interest and maximize the positive spillovers of the sector into the non-oil economy.
Singh noted that with the objective of developing a national gas strategy government drafted and presented a discussion paper in 2023 for input from citizens which received 103 comments. “The feedback will be incorporated in the finalization of the country’s national gas plan along with the request for proposals to design, finance, construct and operate the required gas infrastructure to support upstream developments.”
He pointed out that the Request For Proposals for “private investors to submit proposals for the development of this infrastructure was announced just yesterday.”
The gas-to-energy project which is underway is an investment that is a major cornerstone for the country’s economic development and growth in coming years, “I am happy to report that progress has allowed the project to remain on track for a start-up by the end of this year”, he announced.
As such in promoting value-added production, in response to a government call, he noted that the government has received nine proposals from interested parties vying to construct a refinery in Berbice, five of which were shortlisted. “These proposals are currently being evaluated and the final ranking is expected to be completed in the first quarter of 2024.”
Following this, the top-ranked contender will undertake an “ESIA (Envi-ronmental and Social Impact Assistance) at Crab Island for a facility design-ed to process at least 30,000 barrels of oil per day.”
In October, 2022, the Ministry of Natural Resources invited proposals for the design, finance and construction of a 30,000 barrel per-day oil refinery to be built in the vicinity of Crab Island, in Berbice, in which it will have no ownership or investment interest.
In the area of local content, Singh yesterday pointed out that the Local Content Act 2021 continues “to bring … fruit and government will continue to implement strategies that promote opportunities for Guyanese nationals and Guyanese companies.”
Since January 2022 to the present, contractors, sub-contractors, and licensees reporting to the local content secretariat have recorded 3938 local hires. “Of those Sir, 824 Guyanese were employed as plant and machine operators, 1203 as professionals; accountants, lawyers, engineers, etc, and another 485 as technicians, this brings to the total, this brings Sir the total number of Guyanese persons employed in the sector to more than 6000 persons.”
“In accordance Sir with the Act, five-year masterplans detailing employment, procurement, and capacity development from 33 companies has been received, these project significant growth in activity in the coming years”, he said.
Also in keeping with the Act, Singh said, that the annual procurement plans received from contractors, sub-contractors, and licensees’ amount to an estimated US$721m in procurement of goods and services and training.
“Current estimates suggest that US$518m will be procured from Guyanese suppliers providing goods and services in 2023 of this amount US$15.8m, US$5.5m and US$130m will be spent on accommodation services and laydown yard facilities respectively”, he said.
Other major expenditures include the provision of manpower and crewing services, and ground transportation at US$74.6m and US$13.6m respectively.
Partnerships
Meanwhile, according to Singh the implementation of the Local Content Act has proven to be a catalyst as numerous partnerships between foreign and local companies are “fostering a collaborative environment” in the nation’s developing oil industry.
He stated, “Notable alliances include joint ventures and partnerships to provide shore base facilities, offshore support vessel services, offshore helicopter services, offshore catering services, machining and fabrication services, and hazardous waste management, all comprising partnerships with Guyanese companies employing Guyanese nationals.”
He then reminded that in 2023 he reported on the operationalization of the NRF Act and the Local Content Act “both of which have shaped the legal landscape to the oil and gas sector in our country”, pointing out that in 2023, the Petroleum Activities Act was enacted which introduced the regulatory foundation for licensing, etc.
According to him, the government’s work on revising the Production Sharing Agreement (PSA) resulted in a new model PSA for deep water and shallow water blocks in 2023. “The model PSA now contains clearer and more expansive data and its confidentiality, more defined timelines on steps between discovery, or after discovery, revision for retention fee where licensees want to hold on to certain resources and strong penalties for failure to comply with the work programme.”
On the institutional side, the main coordinating and oversight agencies within the government have implemented systems that allow both physical and remote monitoring of offshore activities in real time, he said.
On exploration and in line with the government’s commitment to competitively auction oil blocks, Singh pointed out that the country’s “inaugural licensing round” was completed in 2023.
“We reviewed the global best practice mechanisms on making block sizes attractive for investments while simultaneously promoting an accelerated rate of implementation and development, 14 such blocks were then determined and offered both within our shallow and deep water areas”, he said.
During the bidding round, eight blocks were shortlisted based on the bidders’ ability to meet the criteria of the expected work programme as well as required financials, “these included two blocks to a local company and the remaining six to companies from Africa, Asia, the Caribbean, Europe, and North America.”
He said negotiation with all identified bidders started in the fourth quarter of 2023, while “awards and exploration activities and the issuing of licences are expected to begin in 2024.”
Meanwhile, other advances in exploration include three new oil discoveries; two in the Stabroek Block and one in the Corentyne “as a consequence of which the total number of discoveries increased to 40 in the Stabroek block and 46 for all explored blocks.”
Production of oil
Singh stressed that encouraging the accelerated production of oil is integral in ensuring that the country optimizes “on our resource potential in a net zero environment as well as to securing revenue from the sector to accelerate our development agenda and to improve the wellbeing of our people.”
As such he said, 2023 saw a ramp up of volumes from the Destiny and Unity Production platform, while Prosperity achieved its first oil which he had announced in November 2023. “More advances in development are expected later this year on the Yellow Tail project, there were also strides in relation to the development of the Uaru Project, amidst commencement of the hull and topside fabrication of the FPSO that will be working in that location.”
He added, “Whiptail is progressing as government has started to review the field development plan submitted last year.”
“Mr. Speaker … collectively production could climb well over 1.3 million barrels per day beyond 2027 making Guyana the single largest Non OPEC contributor to global suppliers.”
Touching on transparency in the sector, Singh said that the government’s commitment to the Extractive Industry Transparency Initiative (EITI) along with industry and civil society representation continues to ensure the “maintenance of the highest standards of transparency in the sector.”
He then noted, that as a consequence of not submitting a report in 2020, Guyana was temporally suspended from the EITI, “Once the 2020 report was published and shared with the secretariat our status as a compliant member was restored, subsequently Sir, our government and the Guyana EITI multi stakeholder group worked to ensure that Guyana’s EITI report 2021 was published in December 2023 and we’ve already started the procurement process for selection of the administrator to prepare the country’s 2022 report.”
Additionally, he contended that the NRF Act provides a comprehensive framework to ensure transparency in the operation of the fund.
