Introduction
As indicated last week, today’s column closely reports the findings in Budget 2024 regarding Items 2 to 6 listed therein. The final item [7] will be addressed next week
Item 2 Petroleum exploration
Here Budget 2024 asserts that, in keeping with Government’s aim to auction oil blocks, the country’s inaugural licensing round was completed in 2023. Based on global best practice, block sizes for investments were created to accelerate exploration and development.
Fourteen blocks were created within shallow and deep-water areas. 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 the required financial commitments.
Other 2023 advances in exploration include three new oil discoveries – two in the Stabroek Block and the other in the Corentyne Block. Consequently, the total number of discoveries increased to 40 in the Stabroek Block and 46 for all explored blocks. These compare with 35 and 40, respectively, at the time of Budget 2023
Item 3 Production of oil
Under item 3 the Budget declared accelerated production is integral for optimal resource use, given a net-zero world, and revenue requirements for Guyana’s development agenda.
From this perspective, 2023 saw a ramp-up in volumes and this is expected to continue in 2024. Indeed, collectively, production rises above 1.3 million barrels per day (bpd) beyond 2027.
Item 4 Harnessing our gas reserves
Budget 2024 expands on the Budget 2023 focus on the Gas to Energy (GtE) Project – a cornerstone for growth and development. It claims the project remains on track for start-up by year end. Significant advancement in the civil works required for setting up the integrated plants was completed, along with the Materials Offloading Facility. Additionally, the construction of the heavy-haul road was completed and is now in use. Onshore pipeline installation and first offshore pipeline installation activities which began in 2023 will continue this year to support start-up of the integrated powerplant by December 2024. The power plant’s construction is anticipated by the second quarter of this year.
A request for proposals by prospective private investors to design, finance, construct, and operate a centralized gas connection, storage and transport facility for all natural gas accessed and produced by oil companies operating in Guyana with the aim of supporting upstream development. The deadline for submission of proposals is February 27, 2024. This project is expected to be fully financed by the private sector.
Item 5 Promoting value-added production
Budget 2016 had reported that Government received nine proposals from interested parties vying to construct a refinery in the Berbice region.
Item 6 Promoting local content
Budget 2024 affirmed the aim of continued success in the Local Content Act 2021 and promoted strategies for nationals. From January 2022 to present, the Local Content Secretariat has recorded 3,938 local hires. Indeed to date Budget 2024 reports the total number of employed in the sector as more than 6,000.
Further, in keeping with the Act, annual plans received from contractors, subcontractors and licensees, amount to an estimated US$721 million in procurement of goods and services and training, above the $700 million in 2022, which covered 40 categories of services. Current estimates suggest that US$518 million will be procured from Guyanese suppliers providing goods and services in 2023… The implementation of the Local Content Act in Guyana has proven to be a catalyst for numerous partnerships between foreign and local companies, fostering a collaborative environment in the nation’s burgeoning petroleum industry. 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. These partnerships not only signify compliance with local content provisions as stipulated by the Act, but also contribute significantly to business expansion, capacity development, and knowledge sharing within Guyana’s petroleum industry and augur well for the sector’s growth in the near and medium term. Notably, for the first time in 2024, a local company will be providing specialized subsea services through a joint venture arrangement with a Norwegian company. Operations will begin in February this year.
Conclusion
Next week I’ll take up the analysis from here.
