The Finance Ministry on Friday disclosed that the balance of the Natural Resource Fund (NRF) – the overseas-based account that holds all of Guyana’s earnings from oil production activities offshore – stood at some US$1.27 billion or an estimated G$266 billion at the end of 2022.
In a statement, the Ministry noted that Senior Finance Minister Dr Ashni Singh submitted Notification of Receipts to Parliament of all petroleum revenues paid into the NRF during the period October 1, 2022 to December 31, 2022, pursuant to Section 33 (2) of the NRF Act 2021.
Finance Minister, Dr Ashni Singh
This notification was published in the Official Gazette on January 5, 2023 and according to the Ministry, it is a demonstration of the People’s Progressive Party/Civic (PPP/C) Government’s continued commitment to the principles of transparency and accountability in the management of Guyana’s oil resources.
The NRF is currently being held at the New York Federal Reserve Bank in the United States of America.
The NRF Act 2021 came into operation on January 1, 2022, replacing the illegitimate NRF Act 2019 passed by the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Administration, which was in caretaker mode at the time after a Motion of No-Confidence was successfully passed against the coalition in the National Assembly in December 2018.
Just over a year after taking office, the PPP/C Government passed the new NRF legislation with a stringent measure to ensure transparency and accountability with the revenues earned from the oil and gas sector.
The NRF Act 2021 allows for substantial improvement in the management of the natural resource wealth of Guyana, including the establishment of a Board of Directors which is responsible for reviewing and approving the policies of the Fund and monitoring its performance, thereby separating the management of the Fund from the Minister responsible for Finance. Another key amendment in the new legislation is that the Minister of Finance could face up to 10 years’ imprisonment if he fails to disclose the receipt of any petroleum revenue received by the Government in the Official Gazette within three months of receipt of such monies.
The International Monetary Fund (IMF), in its 2022 Article IV mission to Guyana in May-June of 2022, commended the PPP/C Government on the amendments made to the NRF Act.
It highlighted, “The NRF Act was strengthened recently. After a thorough review, and while restraining the spending of the oil receipts, the authorities amended the NRF Act in December 2021. The recent amendments set clear ceilings on withdrawals from the Fund for budgetary spending.”
The PPP/C Government has stated that it intended to continue to manage Guyana’s oil resources in a clear and transparent manner to the benefit of present and future generations.
The Government made the first withdrawal from the NRF last year to fund major capital projects outlined in Budget 2022.
Only last December, the Finance Ministry announced that the third withdrawal for 2022 was made to the tune of US$207.6 million (G$43 billion) to go towards financing Guyana’s national development plans.
This was in addition to withdrawals made in May and July of last year, totalling US$400 million (G$83 billion).
Consequently, the accumulated withdrawals from the NRF for the year 2022 was US$607.6 million, equivalent to G$126 billion, in line with the amount approved in the 2022 Budget.
“The NRF Act 2021 came into operation on January 1, 2022, and as part of the Budget 2022 process, parliamentary approval was granted for a total of US$607.6 million to be transferred during the fiscal year 2022,” the Finance Ministry had noted.
The NRF, which contains revenue received from Guyana’s profit oil as well as royalty payments and interest earned, had a balance of almost $290.1 billion as of November 30, 2022. This was according to the monthly financial statements, which were released by the Bank of Guyana.
A breakdown of that amount had shown that the Fund received $36.9 billion in profit oil payments for that month. Meanwhile, its total investment income had been $860.3 million at that time.
Currently, oil production activities are being undertaken by US oil major ExxonMobil and its co-venturers in the Stabroek Block using two Floating Production, Storage and Offloading (FPSO) vessels.
While there are only two FPSOs – the <<<Liza Destiny>>> and the <<<Liza Unity>>> – currently producing over 300,000 barrels of oil per day (bpd), it is estimated that production will climb to 810,000 bpd by 2027 when the Yellowtail development project, Exxon’s third, comes on stream.
The US oil major anticipates at least six FPSO vessels in operation by 2030 offshore Guyana.
