Guyana’s fledgling oil sector contributes over GY$440 billion to economy
The Liza Destiny FPSO
With oil production only commencing less than two years ago, Guyana’s fledgling oil sector has brought in over GY$440 billion; or GY$57 billion more than the 2021 budget. This is according to data from the Central Bank, Stabroek Block operator, ExxonMobil Guyana, and the Guyana Revenue Authority (GRA).
With respect to data from the former, the financial institution said the Natural Resources Fund (NRF) holds GY$111.3 billion (US$534 million). These funds represent royalties and revenues from the sale of profit oil which were deposited into the NRF account held at the Federal Reserve Bank of New York.
As for Exxon, the company recalled that oil production in Guyana commenced in December 2019 and led to the “Petroleum & Gas & Support Services” sector expanding substantially in 2020. Exxon said this was the first full year of crude oil production, amounting to over 27 million barrels (4.3 million m3) in 2020, compared to just over 427,000 barrels (68,320 m3) in 2019. It noted too that oil production averaged 74,300 barrels (11,888 m3) per day over the year, peaking at 120,000 barrels (19,000 m3) per day in December 2020.
“Overall, the sector contributed more than GY$180.39 billion (US$901.95 million) to the national GDP in 2020, representing 17 percent of total GDP at basic prices, compared to 1.9 percent in 2019. In 2019, the Bureau of Statistics anticipated that as a result of the oil and gas sector, GDP may increase up to 13 times and the Guyanese dollar will appreciate in value against the USD once daily production reaches 1 million BOPD (160,000 m3 per day),” the company stated in one of its latest project reports.
Apart from this, Exxon and its subcontractors have expended over $100.5B on capacity building and procurement from local businesses from 2015 to 2021.
Furthermore, the sector has also been a significant driver of tax revenue. In fact, the sector has contributed more than $50B in taxes since 2016. OilNOW understands that Withholding tax – now largely driven by remittances from companies involved in the extraction of crude oil – is expected to grow by 13.9 percent or $4.6 billion above 2020 collections.
With the foregoing numbers in mind, the fledgling sector has provided Guyana with more than GY$440 billion in revenue. By the close of the year, this figure is likely to extend comfortably beyond GY$500 billion.