The Parliament of Guyana, where more than 10 billion barrels of oil equivalents have been discovered over the past half-decade, voted this week to amend its Natural Resource Fund (NRF) Act that will govern a sovereign wealth fund managing the proceeds from oil.
The Parliament also passed the so-called local content bill requiring foreign companies to ensure they use Guyanese individuals and companies for everything from catering services to accounting by the end of next year.
The sovereign wealth fund currently stands at US$534 million, Guyana says, and notes that the bill to amend the Natural Resource Fund Act “also contains several provisions to ensure transparency, proper governance, and accountability.”
“Guyana is a resource rich, underdeveloped economy. Oil revenue is a bonus to accelerate Guyana’s economic transformation, modernization, diversification, and development over the next decade,” said the Guyana Oil and Gas Energy Chamber, which backed the bill.
One of South America’s poorest countries, Guyana, became a major holder of oil and gas reserves in 2015 when ExxonMobil found oil in its waters in what turned out to be a block with resources estimated at 10 billion oil-equivalent barrels and counting.
Now Guyana wants to capitalize on the large oil and gas discoveries over the past half-decade to build up an economy powered by its own energy resources.
The South American nation became a crude oil exporter in early 2020, thanks to Exxon’s huge discoveries offshore Guyana. Over the past two years, the U.S. supermajor and Hess Corp, its partner in the prolific Stabroek Block, have made a dozen more discoveries, while the Liza Phase 1 project is very profitable for the oil corporations and for Guyana.
Liza Phase 1 and 2 developments break even at around $35 a barrel and $25 per barrel Brent, respectively, Hess says. Liza Phase 2 start-up is expected in the middle of 2022 via a floating, production, storage and offloading vessel (FPSO) designed to produce up to 220,000 barrels of oil per day (bpd).