The spending structure for Guyana’s Natural Resource Fund (NRF) which currently holds over US$600 million in oil revenue is not unusual says Co-Director of Americas Market Intelligence energy practice, Arthur Deakin.

The government passed the NRF bill on December 29, paving the way for oil revenues to be allocated for major national development initiatives. Under the legislation, Guyana will be allowed to withdraw 100% of the first US$500 million of deposits from the previous fiscal year, 75% of the second, 50% of the third, 25% of the fourth, 5% of the fifth, and 3% of any amounts in excess of the first two US$500 million. The exception to these rules relates to cases of major natural disasters.

Some in Guyana have criticized the withdrawal rules claiming the government is focused on a short-term gain at the expense of sustainable savings and inter-generational wealth.

But writing in a column published on OilNOW Wednesday, Deakin said the NRF withdrawal structure is not unusual, particularly for a country at Guyana’s stage of development.

“A front-loaded spending structure for a SWF is not unusual, especially for a country that has been historically underdeveloped,” Deakin said. “The percentage of annual withdrawals from the fund will gradually decline as the economy matures, being limited to 3% of total deposits made in the previous year.”

He said although the amount spent should not be overlooked, it is fundamental to implement better accountability mechanisms to guarantee transparent spending.

“It is even more important to ensure that oil funds are used to create a diversified, free-market economy that is not dependent on oil and gas,” Deakin wrote.

Guyana’s President, Dr. Mohamed Irfaan Ali has made it clear that the fund will be managed with the highest level of transparency and accountability.

The new legislation explicitly requires the minister of finance to publish information in the official gazette on all receipts into the fund within three months and table this information in the National Assembly.

“Every single cent of revenue that comes into the fund has to be published, but much more than this, he [the finance minister] then has to table that in the National Assembly so that the entire Parliament which includes all members of the opposition, the media, the government would be there…” Mr. Ali said.

He reminded that failure to do this will result in harsh penalties that were not previously in place.

“The consequence will be three to ten years imprisonment. So, not only are we setting out the principles, enhancing transparency, but we are willing to put the harshest of penalties because we do not intend to keep any information in relation to the management of the Natural Resource Fund away from the public,” he pointed out.

Authorities have also said diversification of the economy remains key and all efforts will be made to ensure Guyana does not become dependent on oil.

The government has allocated billions of dollars in the 2022 national budget for major development projects in the oil producing South American nation.

SBM Offshore project portfolio at record level with multiple Guyana FPSOs in play

By OilNOW -- February 10, 2022 -- 0-- Source -- OilNOW -- https://oilnow.gy/featured/sbm...uyana-fpsos-in-play/

The Prosperity FPSO hull is pictured next to its sister unit, the Liza Unity FPSO, at the Keppel Shipyard in Singapore. (SBM Offshore photo)

Dutch floater specialist SBM Offshore reported on Thursday an Underlying Directional revenue of US$2,317 million for 2021, an increase of 1% compared with 2020, mainly resulting from ramp-up of activities with five FPSOs under construction in 2021, the awarded limited scope on the FPSO for the Yellowtail project in Guyana and a higher contribution from the renewables and offshore services product lines.

SBM Offshore said the revenue increase from this general ramp-up more than offsets the year-on-year decrease resulting from the Johan Castberg Turret Mooring System project delivery in 2020.

“Our project portfolio stands at a record level with five projects under execution and a large FEED underway for the Yellowtail development project for Exxon in Guyana,” said Bruno Chabas, CEO of SBM Offshore.

He said the Liza Unity FPSO is now in the commissioning phase, in line with the company’s pre COVID-19 schedule.

“The other projects remain on track relative to the latest planned schedules and we continue to anticipate a competitive level of performance from this portfolio,” Chabas stated.

Project teams have continued to work closely with client teams and contractors to mitigate the impacts of COVID-19 on the execution of projects. The company said the degree to which these challenges can be mitigated going forward varies from project to project.

“The profitability of SBM Offshore’s overall project portfolio remains robust and competitive,” the company said. This includes multiple FPSOs in play for projects at the ExxonMobil-operated Stabroek Block in Guyana.

In this regard, SBM Offshore provided the following updates:

FPSO Liza Destiny

The third stage flash gas compressor on the unit remains stable and continues to operate. Additional engineering activities are ongoing to finalize a redesigned flash gas compressor with an expected installation on the unit around mid-year 2022.

FPSO Liza Unity

The FPSO Liza Unity arrived safely in Guyana in October 2021 where the hook-up and the installation campaigns have successfully been completed. Operations readiness activities have progressed and the project targets first oil in the first quarter of 2022.

FPSO Prosperity

The work in dry dock is progressing per schedule with the installation of the mooring systems. The topsides module fabrication is ongoing with the first modules planned to be completed and lifted in the first quarter of 2022. First oil is expected in 2024.

SBM offshore has been awarded contracts to perform Front End Engineering and Design (FEED) for the Yellowtail FPSO, ExxonMobil’s fourth development project in Guyana. Following FEED, subsequent government approvals and project sanction including final investment decision by ExxonMobil and release of the second phase of work, SBM Offshore will construct, install and then lease the FPSO and operate it for a period of up to 2 years.