US$200M saved in the oil fund

…. Royalties pegged at over US$21M; profit oil US$185M

A total of US$206.6 million in royalty payments, profit oil and interest to Guyana has been placed in the country’s Natural Resources Fund (NRF). A total of US$21.2 million has come from royalty payments while US$185M has resulted from profit oil.

This update was provided by Vice President Bharrat Jagdeo on Tuesday at a press conference. Guyana has received four royalty payments to date. The first received came in the amount of US$4.9M; the second US$3.6M; the third US$4.3M and the fourth US$8.3M.

Meanwhile, profit oil has resulted in US$185M. A total of $54.9M was received in March 2020; US$35M in June 2020; US$46M in June 2020 and US$49M in January 2021.

Under the Production Sharing Agreement (PSA) governing the Stabroek Block, Guyana will be receiving at a minimum two per cent royalty on all oil produced in the block, plus 12.5 per cent profit oil. As the capital and operating costs are liquidated, Guyana’s share of profit oil will increase.

Meanwhile, under the current Administration, 29 companies had responded to the retender for Request for Proposals (RFPs) to market Guyana’s share of oil from the Liza Destiny FPSO but according to Jagdeo, the “nonsensical” evaluation criteria set by the Department of Energy (DE) saw 28 of them being disqualified leaving only Lukoil.

It knocked out companies already selling Guyana’s oil such as the Stabroek Block co-ventures. As a result of the lack of a competitive arrangement, it was agreed that Guyana’s last two shipments (out of five and initially for 2020) would be bid upon by the three Stabroek Block partners which saw Hess winning.

He said further that there have been several offers to purchase Guyana’s crude directly to eliminate marketing costs but these are still under consideration.

Moving forward, the Vice President said: “We are now deciding whether we just go and invite the same companies and change the so-called pre-qualification criteria because if the pre-qualification criteria is set up in a way where you can disqualify the person for lack of technical capacity who is just selling already your oil, something has to be seriously wrong…for us, it is the best price for oil, that is what we’re looking at because you have hundreds of companies literally that can take this oil and sell it.”

Jagdeo said that by the time Guyana’s next shipment is ready, there will be a proper assessment of the situation and a solution.

Caption: Flashback: The fuel hose leads from the Liza Destiny to the Cap Philippe for the transfer of Guyana’s first million barrels of crude