Fuelled by development and advancement in the burgeoning oil and gas sector, Guyana’s export earnings could increase significantly over the next four years, reaching 8 billion USD by 2024, according to the Inter-American Development Bank (IDB) in its Caribbean quarterly bulletin, titled: “The fragile path to recovery.”
At the end of 2020, the oil and gas sector accounted for 36 per cent of Guyana’s Gross Domestic Product (GDP), while services accounted for 25 per cent, agriculture represented 18 per cent and gold production stood at seven per cent.
Further, owing to the performance of the petroleum sector, Guyana’s GDP grew 43.5 per cent in 2020 and is projected to grow by 20.9 per cent in 2021.
“The main driver of GDP in the medium term is oil exports, which the International Monetary Fund (IMF) estimates will represent 38.2 per cent of GDP in 2020–2021,” the IDB related in its quarterly report.
As it is now, the “cash cow” of the oil and sector is the Stabroek Block offshore Guyana, which is 6.6 million acres (26,800 square kilometers) and holds recoverable resources which are estimated at more than nine billion oil-equivalent barrels.
ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, holds 45 per cent interest in the Stabroek Block, while Hess holds 30 per cent and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 per cent interest.
The over 25 discoveries on the block to date have established the potential for at least six floating production, storage and offloading (FPSO) vessels producing more than 750,000 barrels of oil per day by 2026.
Production is already ongoing at ExxonMobil’s first offshore Guyana project, Liza Phase One, which began producing in 2019, well ahead of the industry’s projected development time. And Liza Phase Two remains on track to begin producing oil by early 2022.
It was reported that Liza Phase Two will produce up to 220,000 barrels of oil per day at peak rates, using the Liza Unity FPSO, while the Payara field development, ExxonMobil’s third project in the Stabroek Block, is expected to produce up to 220,000 barrels of oil per day, after start-up in 2024.
With those and other projects set to come on stream soon, the IDB has said that exports will increase to 71 per cent of GDP in 2023 before declining to 59 per cent of GDP in 2026. This reflects a significant increase when compared to the period 2010-2019, when exports represented approximately 36.1 per cent of GDP.
“Oil exports are driving this growth, which is estimated to increase from US$1 billion in 2020 to US$5.5 billion in 2024, pushing total exports up to US$8 billion,” the IDB reported.
Improvements in the country’s economic standing are already visible, with the Bank of Guyana reporting in the April that the country recorded positive economic growth and an increase in exports by US$379.6 million.
According to the central bank, the local economy continued to benefit from oil output, but the non-oil economy registered mixed output performance in the major sectors during the first quarter of 2021, as the economy is still recovering from the impact of the ongoing pandemic.
Even with output not reaching pre-pandemic levels, the country was able to record a merchandise trade surplus of US$369.2 million in the first quarter, juxtaposed with a deficit of US$1 million last year. This out-turn, according to the central bank, reflected a US$379.6 million growth in exports.
At the end of the first quarter of 2021 total domestic exports reached US$992 million compared to US$622.8 million, which was recorded during the corresponding period last year.
And even with the output in some sectors declining during the first quarter of 2021, the prospects remain positive moving forward, as the central bank believes that export receipts will improve mainly because of oil exports, and higher prices for gold and rice.
On the topic of export and trade, President Irfaan Ali, in November, 2020, had said that trade facilitation is an area which will receive the government’s attention.
Issues such as delays in customs clearance, increase costs and reduce export competitiveness will soon be addressed through an electronic single window for trade, which will reduce time and costs, the President said.
To this end, he said: “We will also be seeking to ensure that investors’ applications and requests are facilitated more promptly. As part of our agenda to improve ease-of-doing business, the Guyana Office for Investment (Go-Invest) is being restructured as a vehicle to attract and facilitate investment and export promotion.”
Dr. Ali said too that the government will be working to enhance the competitiveness of local businesses.
Through the National Quality Infrastructure (NQI) project, the government will create a catalyst for competitiveness and increased global market access.