By Kiana Wilburg
On December 20th, Guyana will observe five years as an oil producing State. In that space of time, we produced over 500 million barrels of oil. We also earned over US$5 billion in revenues. But what have we accomplished beyond this?
On the legislative front, there has been considerable effort to strengthen our abilities to oversee this industry. We have seen for example, the passage of the Local Content Act, the Natural Resource Fund Law and the Petroleum Activities Law. This modernized framework (deserving of an editorial of its own) will be soon complemented by a National Oil Incident, Emergency Response, and Financial Responsibility Law which will deal with costs for oil spills and environmental damages from such activities. Works have also started on Health and Safety Regulations for the oil and gas sector.
Key sectoral regulators have also undergone tremendous capacity building. Take the Guyana Revenue Authority for example. Following recommendations made by the International Monetary Fund (IMF) in a Guyana Technical Assistance Customs Petroleum Report (September 2019), GRA established the Customs Petroleum Unit and Petroleum Revenue Audit Unit to focus on oil and gas audits and routine Customs functions relevant to the sector.
The tax agency has also been at the forefront of aggressively staffing key departments examining oil companies’ revenues and cost recovery statements as well as performing customs controls. While a separate editorial would be needed to outline the successes of this agency in strengthening its capacity, it is noteworthy that this year alone, the agency has crafted Sandard Operating Procedures to enhance the monitoring of all shorebases. These rules also address the need for officers aboard installation vessels with helipads for the examination of cargo outbound and inbound.
The Environmental Protection Agency is also stepping up its game. To date, it has successfully gotten ExxonMobil to establish a Decommissioning Fund. Notably, this fund which holds over US$60 billion as of October 2024, will ensure Guyanese taxpayers are not left to handle the costs associated with the removal of the infrastructure used to extract oil.
Further to this, the EPA has ensured that Exxon has complied with its permit obligations to have a capping stack in-country, along with additional subscriptions for the Stabroek Block. This equipment is a critical one as it is designed to be placed as a cap over a blown out well and/or redirect the flow of hydrocarbons. Notably, Guyana is only one of two oil-producing countries in Latin America and the Caribbean and of 13 globally to have such a mechanism in place.
Buttressing this is also an insurance policy totalling US$600M per oil spill incident and a parent guarantee starting at US$2B. The EPA has made it clear that Exxon is bound by its permits and the laws of Guyana to cover ALL oil spill costs beyond its parent company guarantee.
The environmental regulator has also secured strategic collaborations with NASA’s satellite imagery and Maxar’s Earth observation capabilities, thereby allowing access to real-time data on all offshore oil operations, including drilling activities, gas flaring, and oil spills.
Beyond GRA and the EPA, all key government agencies have benefitted from capacity building efforts, particularly in crude marketing, economic modelling, and cost benchmarking. In fact, the government has procured the QUE$TOR Software to enable the agencies to examine cost and revenue statements for oil companies as well as their field development plans (FDP) and work programmes.
In terms of industry management, we have seen the launch of our first auction in 2022. It must be noted that no contract will be signed unless companies can prove they can commit to their work programmes and can pay the respective signing bonuses. Based on the awards thus far, Guyana could cash in on US$100M before the start of any work.
This author also wishes to note that discussions are ongoing to hire a company to conduct a seismic survey so that authorities can have a better understanding of the prospective resources. Budgetary provisions have also been made to establish a petroleum data repository as opposed to having our current and historical data stored in Huston, Texas.
On the production side, Guyana is currently producing over 640,000 barrels of oil from three vessels (Liza Destiny, Liza Unity and Prosperity). The start up of a fourth project next year at 250,000 barrels of oil per day will take production beyond 900,000 barrels of daily output. As works progress on the fifth and sixth projects, Exxon has already outlined the next two projects for Guyana—Hammerhead and Longtail.
On the gas front, citizens are well aware of the government’s imminent plans to start up the nation’s first gas-to-energy project. It will deliver 300MW of power in the first phase and 250MW in the second. Both phases also include plans for a Natural Gas Processing facility which will deliver additional benefits to the country by providing by-products we can export.
Finally and perhaps most importantly, we come to the issue of how the government has spent the oil money. From 2022 to 2024, the administration has approved a total of US$3.2 billion in withdrawals from the Natural Resource Fund (NRF), all of which were deposited into the Consolidated Fund and their use, approved by the National Assembly. No doubt, this oil wealth has allowed authorities to expand their food, energy and social security agenda, the details of which can be explored via a review of the successive budgets.
As we bring 2024 to a close, and simmer on reflections of how our oil sector, and the country by extension has performed, I am quite sure critical eyes will scream until their voices are hoarse about the imperfection and doom that loom.
But for a moment, just ponder, what if none of the above were in place at all ? What risks would we be facing today? How much more of our economic value would be slipping through the craters of our hands?
This author does not suggest in the slightest that the strides made should be used as an axe to dismember our duty to vigilance. No! I would never suggest that today! Not Ever! But what I do appeal for is that we approach our growth story with a sense of pride and balance. Yes, mistakes have been made but let us acknowledge what we got right, what could have been done better, and strive fervently towards finding solutions that leave us better off.
By fully embracing the “hand wash hand mek hand come clean” principle, we would not only better our nation building efforts, but also escape the detrimental effects of being master complainers.
