Analysis and News

Latest oil lift takes total earnings from Oil and Gas sector to $534 Million US

BY GEOCAP's Navendra Seoraj

Supported by favourable market conditions, Guyana was able to earn approximately 80 million USD from the sale of its latest oil lift, taking the total direct returns from the local petroleum sector to over 534 million USD.

Based on statistics from the Bank of Guyana's monthly report on the Natural Resource Fund (NRF), the aggregate sum moved from 436,132,855.53 USD in September to 534,016,987.03 USD in October.

This is on account of 16,757,920,000 GYD (approximately 80 million USD) from “profit oil” and 3,647,083,000 GYD (approximately 17 million USD) in royalties from the company producing oil offshore Guyana, ExxonMobil. 

According to local reports, Guyana sold its first one million barrels of crude on February 19, 2020, raking in nearly 55 million USD.

In its second million-barrel sale, the country received 35 million USD, and another 46 million USD as proceeds from the sale of its third million-barrel of crude, and 49.3 million USD from its fourth oil lift.

Further, the country, in March, earned 61 million USD from the sale of its fifth oil lift, and an additional 60 million USD from the sale of its sixth lift, before closing September with close to 80 million USD from its seventh lift.

With Brent – the benchmark Guyana uses to sell its crude – still hovering above 70 USD per barrel of oil, the next lift could attract returns that are equally high as those recorded in September and October.

In October, Reuters had reported that Goldman Sachs said a strong rebound in global oil demand could push Brent crude oil prices above its year-end forecast of 90 USD per barrel.

Should prices indeed rise to this level, Guyana could earn over 90 million USD from the sale of one lift, which, at this point, is just over one million oil equivalent barrels. 

While the government is reportedly pursuing a diversified plan that encompasses all productive sectors, oil revenues will still be significant to Guyana. The Inter-American Development Bank (IDB) stated that over the medium term, oil production is expected to propel economic growth, with oil exports growing by an annual average of 48.6 per cent over 2020-2023.

In a further projection of what is expected as a result of oil production offshore Guyana, the International Monetary Fund (IMF) had said that the country's Gross Domestic Product (GDP) per capita could double between 2018 and 2023, coming from 4,600 USD to 9,200 USD.

Over the period under review, the IDB reported too that an increase in oil exports would enhance the country’s Gross Domestic Product (GDP) by 17.1 per cent and increase government revenue by 6.7 per cent.

The IDB in a report titled, “Economic Institutions for a Resilient Caribbean,” related that earnings from Guyana’s oil and gas sector could reach 31 billion USD by 2035. Further, total cumulative government oil revenues could reach 48.9 billion USD by 2052.

Indicating that the government is aware of the potential oil and gas sector, Vice-President, Dr Bharrat Jagdeo, had said that it is important that Guyana pursues an aggressive mission of getting as much oil out of the ground quickly.

Addressing the recent Offshore Technology Conference in the US, Dr Jagdeo said that even as Guyana pursues a green agenda, the nation has to maximise the benefits from the oil and gas sector and use same to change the lives of every Guyanese. 

“We don’t know how swiftly we’ll get to a decarbonised world, but we have to make use of this period when there is still demand to get as much as possible out of the ground and that is why we support the rapid pace of the industry, but it must be done safely,” he related.

As Guyana moves ahead with its plan to absorb the benefits of the sector, the IDB has advised that the government will need to foster macroeconomic stability, ensure fiscal sustainability, aim for an equitable intertemporal distribution of oil wealth, and meet developmental objectives considering its institutional capacity.


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