….. says country on target to increase capacity to 340,000 bpd in 2022
A total of 42.7 million barrels of oil were produced in 2021 compared with 27.2 million in 2020, Senior Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh reported on Wednesday as he presented the 2022 National Budget.
“This level of output was supported by the remedying of the mechanical issues initially encountered as a result of which the oil production rate for 2021 is now estimated at approximately 116,900 barrels of oil per day (bpd),” he explained.
The Finance Minister said the increased level of production resulted in the subsector’s value added increasing by an estimated 46.5 percent.
Currently, Guyana has the 17th largest oil reserves in the world to date. Since 2015, there has been 28 commercially viable oil discoveries in the Stabroek Block and an estimated recoverable resource of over 10 billion oil-equivalent barrels.
The Stabroek Block currently has three identified production areas Liza 1, Liza 2, and Payara. Production capacity is currently at 120,000 bpd with the Liza Destiny FPSO in operation.
However, the country’s production capacity is expected to increase significantly when the Liza Unity FPSO is put in operation this year. The added FPSO will raise capacity to 340,000 bpd, and the deployment of the Liza Prosperity FPSO in 2024 will further raise capacity to 560,000 bpd.
“With the anticipated fourth production area, Yellowtail, estimates are poised to reach 810,000 bpd by 2026/27 and additional developments under consideration could see us reaching 6 FPSOs producing 1 million bpd by 2030,” Minister Singh told the House.
Further, he disclosed that the current estimate of the gas reserve is 16 trillion cubic feet (Tcf) with projections from Liza 1 and 2 likely at 50 million standard cubic feet per day (mmscfd) and Payara will bring an additional 20 mmscfd.
Meanwhile, development works on Payara and Yellowtail are ongoing and the exploration programme will continue in 2022, the Finance Minister assured. It was noted that the operators in the Kaieteur and Canje Blocks also advanced exploration programmes in 2021, with additional wells likely to come online in the last quarter of 2022. In addition, exploration activities will continue in the Kanuku block.
As previously announced, during the third quarter of this year, the Government will auction off the available acreages of offshore blocks. “This will be done in an open and competitive manner which will allow for a more marketable approach to Guyana’s resource development and at same time bring financial gains for the country,” Minister Singh assured.
According to him, the legal framework governing the sector has also undergone significant strengthening with the passage of the ‘historic’ Local Content Act 2021.
It was explained that the legislation identifies 40 sectors or services and stipulates a minimum percentage of the total value of expenditure on those services that oil companies and their sub-contractors must procure from Guyanese suppliers.
“In doing so, the Act provides an enabling framework for the development and expansion of Guyanese companies and most importantly business and job opportunities for Guyanese nationals,” he explained.
Referenced was also made to the controversial Natural Resources Fund Act 2021, which repealed the 2019 Act. According to him, the new legislation remedies a number of fundamental deficiencies by scaling back the excessive powers of the Minister of Finance and removing any possibility of ministerial discretion in determining the ceiling on withdrawals; establishing a Board of Directors for the first time, and vesting in that Board the powers that were previously concentrated in the hands of the Minister.
Generally, the oil and gas sector, which is also fueling the $552.9B National Budget, promises to be the driver of historically high levels of growth in the Guyanese economy with strong positive spillovers into the non-oil economy
