Frontera to focus on Corentyne block 

17 Jun 2022

• • • Following Light Oil and Gas Condensate Discovery at The Kawa-1 Exploration Well, Frontera and JV Partner to Focus on Corentyne Block
    • The Wei-1 Exploration Well, Expected To Be Spud In 3Q’22
    • Frontera has in Principle Come to Mutual Agreement with the Government of Guyana to Relinquish Demerara Block

Frontera Energy, joint venture partner with CGX Energy in the Petroleum Prospecting License for the Corentyne block offshore Guyana, announced that, following constructive discussions with the Government of Guyana, the joint venture will focus exclusively on the exploration opportunities in the Corentyne block. The decision follows the discovery at the Kawa-1 exploration well on the Corentyne block.

Frontera will continue to integrate its findings from the Kawa-1 well into preparations for its second exploration well, called Wei-1, in the third quarter of 2022. The Wei-1 exploration well will be located approximately 14 kms northwest of the Kawa-1 exploration well in the Corentyne block, approx. 200 kms offshore from Georgetown. The Wei-1 exploration well will be drilled in water depth of approx. 1,912 feet (583 metres) to a targeted total depth of 20,500 (6,248 metres) and will target Maastrichtian, Campanian and Santonian stacked channels in a western channel complex in the northern section of the Corentyne block.

Given the importance of the Demerara block to Guyana, Frontera has, in principle, reached an agreement with the Government to allow for the relinquishment of the Demerara block through a mutual termination agreement which terms remain to be defined and documented. Such termination agreement would allow relinquishment of the Demerara block in a timely manner, allowing the people of Guyana to benefit from exploration activities under the stewardship of interested parties.

Orlando Cabrales, Chief Executive Officer of Frontera, commented:

‘The results from the Kawa-1 well have been a significant factor in developing a defined opportunity set for the joint venture partners. It was important to us, as partners to the Government of Guyana, to positively resolve our desire to focus on Corentyne and not allow the Demerara block to be delayed in terms of assessing its potential. As a result, we have, in principle, a mutual agreement to relinquish the Demerara block and allow for interested parties to make advances in that area. We would like to express our appreciation to Guyana for this constructive outcome that benefits all parties.’

Source: Frontera Energy

ExxonMobil

by Andreas Exarheas, June 13,

On June 10 in White House briefing room remarks on inflation and actions to lower prices and address supply chain challenges. President Biden said:

“We’re going to make sure that everybody knows Exxon’s profits.  Exxon made more money than God this year. One thing I want to say about the oil companies, they talk about how we have, they have 9,000 permits to drill. They’re not drilling. Why aren’t they drilling? Because they make more money not producing more oil.

“The price goes up, number one. And, number two, the reason they’re not drilling is they’re buying back their own stock – which should be taxed, quite frankly – buying back their own stock and making no new investments. So, I – I always thought Republicans are for investment. Exxon, start investing, start paying your taxes.”

ExxonMobil company spokesperson responded thus-

“We have been in regular contact with the administration, informing them of our planned investments to increase production and expand refining capacity in the United States.

“We increased production in the Permian Basin by 70 percent, or 190,000 barrels per day, between 2019 and 2021. We expect to increase production from the Permian by another 25 percent this year. We’re spending 50 percent more in capital expenditures in the Permian in 2022 vs 2021 and are increasing refining capacity to process U.S. light crude by about 250,000 barrels per day – which is the equivalent of adding a new medium sized refinery”.

“We reported losses of more than $20 billion in 2020, and we borrowed more than $30 billion in 2019 and 2020 to support our investments in production around the world. In 2021, total taxes on the company’s income statement were $40.6 billion, an increase of $17.8 billion from 2020”.

American Petroleum Institute (API) Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola said, “the American people are looking for solutions, not finger pointing. The price at the pump that Americans are currently paying is a function of increased demand and lagging supply combined with the geopolitical turmoil resulting from Russia’s aggression in Ukraine.

“Lawmakers should focus on rational policies that increase U.S. supply to help mitigate the situation rather than political grandstanding that does nothing but discourage investment at a time when it’s needed the most.”

In April, ExxonMobil Corporation announced estimated first-quarter 2022 earnings of $5.5 billion, or $1.28 per share assuming dilution. First-quarter results included an unfavorable identified item of $3.4 billion associated with the company’s planned exit from Russia Sakhalin-1, or $0.79 per share assuming dilution. In the first quarter of 2021, ExxonMobil reported earnings of $2.7 billion.

“The quarter illustrated the strength of our underlying business and significant progress in further developing our competitively advantaged production portfolio,” Darren Woods, chairman and chief executive officer of ExxonMobil, said in a company statement in April.

“Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather and timing impacts. The absence of these temporary impacts in March provides strong, positive momentum for the second quarter,” he added in the statement.

Rigzone wrote an article exploring why the majority of leased offshore federal waters are non-producing.

 

 

Exxon consortium Income Tax

Jun 12, 2022

According to the Production Sharing Agreement (PSA), under the taxation provisions, Guyana agreed to, …to pay ExxonMobil’s share of Corporation and Income Tax. It would mean, that Guyana annually foregoes billions of US dollars.

Clause 15.4 (a) of that PSA stipulates that the Minster of Natural Resources agrees that a sum equivalent to the tax assessed to be paid by the Minister to the Commissioner General of the Guyana Revenue Authority (GRA) on behalf of the contractor—ExxonMobil Guyana – and that the amount of such sum will be considered income of the contractor.

At 15.4 (b) the Minister also agrees that the appropriate portion of the Government’s share of profit oil delivered, shall be accepted as payment in full for the contractor’s share of Income Tax and Corporation Tax—levies owed to the GRA.

Collectively it would mean that instead of Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—paying over hundreds of millions of US dollars annually as taxes owed to GRA, it has agreed to accept that a portion of its share of profit oil, be recognised as its taxes. Documentation to this effect is then provided to the US based company allowing it to not have to pay any taxes in its home country for its earnings overseas.

Collectively, this has led to Guyana’s financial records being essentially misrepresented to reflect profits from an industry when in fact the country is in the red losing hundreds of millions by foregoing the payment of Income and Corporation Tax.

Addressing the forgone Income Tax alone, juxtaposed with Guyana’s earnings on Profit Oil and its two percent royalty would expose that Guyana will in fact lose in excess of $2B this year.

The applicable section of the PSA

At 25 percent of its earnings, Income Tax foregone would eclipse Guyana’s earnings. Minister for Finance, Dr. Ashni Singh predicted that Guyana will earn US$957M this year—US$857 being profit and US$100M being royalty.

ExxonMobil partner in the Stabroek Block, John Hess, Chief Executive Officer of Hess Corporation recently pegged earnings from the oil block this year to be some US$2.6 Billion for its 30 percent stake in the operations.

 The Stabroek Block is being developed by two Floating Production Storage and Offloading (FPSO)—the Liza Destiny and Unity and the Liza I and II developments—and collectively the oil companies are set to earn just under US$9 Billion.

Should Guyana charge Income Tax from ExxonMobil and their partners this year, at 25 percent, Guyana would earn US$2.25B on Income Tax alone.

With Guyana agreeing to pay that tax bill to GRA from its less than US$1B earnings, the Ministry of Natural Resources would still owe GRA some US$1.3B, to be paid from future earnings. Conversely, it would mean that Guyana will lose US$2.25B it should have collected as Income Tax from the oil companies.

Hess CEO, John Hess, made the revelation of the oil companies earnings from the Stabroek Block at the Bernstein’s 38th Annual Strategic Decisions Conference. During discussion on Guyana, he said the company received three lifts of one million barrels of oil from the Stabroek Block, which has two ongoing projects, Liza Phase One and Liza Phase Two.

In the second quarter, he said the lifts will increase to seven and in the third and fourth quarters, eight lifts each. “We have over a US$100 barrel price. We are therefore going from US$300M of incremental cash flow from Guyana to US$700M in the second quarter, then US$800M in the third and US$800M in the fourth.

During the reading of budget 2022 earlier this year Dr. Singh said that there will be 94 lifts from the Stabroek Block, 13 of which will be government lifts. From this, it is estimated that deposits into the Natural Resource Fund for 2022 will total US$957.6 million, comprising some US$857.1 million earned from the government lifts of profit oil, and an additional US$100.5 million from royalties.

Exxon’s subsidiary and operator, EEPGL, is poised to earn US$3.9B while CNOOC will bank US$2.2B this year. Exxon consortium will gain US$8.7B profit tax-free in 2022.

1. 1. 1.  The Liza Phase I development, which began production in December 2019 utilising the Liza Destiny FPSO with a production capacity of approximately 120,000 gross barrels of oil per day, recently completed production optimisation work that expanded its production capacity to over 140,000 gross barrels of oil per day.
      2. The Liza Phase II development, utilising the Liza Unity FPSO, began production in February 2022 and is expected to reach its production capacity of approximately 220,000 gross barrels of oil per day by the third quarter.
      3. Payara, the third development is ahead of schedule and expected to come online in late 2023, utilising the Prosperity FPSO with a production capacity of approximately 220,000 gross bopd.
      4. Yellowtail the fourth development, is expected to come online in 2025, utilising the ONE GUYANA FPSO with a production capacity of approximately 250,000 gross bopd.

At least six FPSOs with a production capacity exceeding one million gross bopd are expected to be online on the Stabroek Block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources. Stabroek Block is 6.6 million acres (26,800 square kilometres).

ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 percent interest in the Block. Hess Guyana Exploration Ltd. holds 30 percent interest, and CNOOC Petroleum Guyana Limited holds 25 percent interest.

Unless Exxon acquire the CNOOC share and farm it out to Shell to benefit from the gas project Guyana can ensure future lifts by persuading its US diaspora to acquire part of the PRC asset.

 

Hess

Jun 12, 2022

Guyana is any oil company’s biggest dream. Guyana is Christmas, New Year’s Eve, and Carnival all wrapped in one and loaded with oil goodies.

This is what John Hess, the CEO of Hess Corporation has been preaching to his investors, to Wall Street, to the world. His words were, in effect, ‘give us time, and everyone will be rich in no time; give us some space, and the prosperity race will be on.’ His words have proven to be prophetic.

There is plenty oil in Guyana, and it is not the thick, sludgy variety that requires expensive refining, not so appealing to both oil producers and consumers. Rather, it is the sweet stuff, low in sulfur, and light to the touch of machinery, a boon to industry. Best of all, Guyana’s oil is already abundant, with much more at deeper levels, all of it coming at giveaway prices.

There is nothing better than that, and the anxious and nervous heavy-hitter investors and oil sector watchers can all breathe a sigh of relief that their patience and confidence have been rewarded, and what they have to do now is rake in the billions. Guyana is all good news, and the outlook is that things will only get better and better, meaning, richer and sweeter.

Breakeven prices, return on capital invested, an annual cash flow of 25 percent compounded are all simply out of this world. Hess and company (Exxon, CNOOC) are in oil heaven. They have many grounds, every right, to boast to the world, to preen and strut their stuff before all listeners and watchers, . The word has been drill, baby, drill; and this is capitalism at its profitable best.

The PPP/C Government and its leaders are not a problem, as both are already under lock and key. The Opposition is also in the bag, given that it can hardly say a word for itself, seems to lack any idea of where its feet are, and is the best example around of frailty, frivolity, inefficiency. There is one problem, though, and it is one that is not going away.- the Guyanese people, who expect so much from this oil.

Distressed citizens are aware of what is going on, who is getting, and who is left out. They hear foreigners like John Hess drooling and bragging before everyone, while they are reduced to begging. They note with anger the cabal of insiders in the Government: cronies, families, friends, business leaders. Guyanese observe this new aristocracy created by the Government and powered by the oil bonanza, which does not reach the poor diverse peoples.

John Hess could speak of a “start to return cash” to his deep-pocketed investors, while Guyanese lament whether this oil will ever bring any kind of return for them. . Hess could rave about Guyana being an ‘industry leading durability story’, while Guyanese find ways to coexist with reality. Will this oil ever mean something for regular Guyanese?

 

 

Offshore Guyana could contain billions more oil barrels

Jun. 02, 2022 Carl Surran, SA News Editor

New oil finds at a deeper layer offshore Guyana could add billions of barrels to what is already the world’s largest oil discovery in 20 years, Hess CEO John Hess said,accordingto Reuters.

“There are multi-billion barrels remaining on top of” the 11B barrels of oil and gas found so far in the offshore Stabroek block”, the CEO said, noting the Exxon-led consortium, which made most of its 30-plus oil discoveries at depths of ~15K feet, has started to drill at 18K feet. The Fangtooth discovery well drilled earlier this year at 18K feet, could underpin another production unit on its own, said Hess, whose company owns a 30% stake in the group.

The Guyana projects are ahead of schedule, and Exxon’s third planned platform may now start production at Payara as soon as Q3 2023, Hess told the Bernstein Strategic Decisions conference, adding that the Guyana gusher will exempt the company from needing to make acquisitions to sustain higher dividends to shareholders.

Hess“will become that rare long-term growth stock in a very cyclical industry,” Long Player writes in a bullish analysis published on Seeking Alpha.

 

 

Global Implications of Oil Bonanza

David Blackmon, Forbes, Jun 7, 2022

The world’s thirst for crude oil continues to grow, as exemplified by the big, 5.1 million-barrel draw from U.S. crude inventories announced by the Energy Information Administration (EIA). Referring to the current historically high prices for oil and refined products, analyst Amrita Sen from Energy Aspects, told the Financial Times that “We are in this for the long haul: potentially a decade.”

One reason has been a chronic deficit of capital investment in finding new reserves of crude oil around the globe, a financial disease that began infecting the oil and gas industry around 2015. Of several main causes of this disease, the most powerful has been the efforts of ESG (Environment, Social, Governance) investor groups.

These groups, with prominent names like Vanguard and BlackRock, have been leveraging the trillions of dollars in financial assets they manage to force a transition from fossil fuels to renewables. While their efforts to this point have failed to actually diminish the world’s thirst for oil and natural gas, they have succeeded in their secondary goal of making oil increasingly expensive as the global crude market has become chronically under-supplied.

As the oil industry strives to meet rising demand for its products, an increasing level of attention has come into focus on the unlikely South American micro-state of Guyana, where a consortium led by ExxonMobil has recorded a string of major discoveries over the past few years. Exploring in the Stabroek Block of the Guyana-Suriname Basin, Exxon and its partners, Hess Corp and CNOOC reported their initial “transformative” discovery in their Liza Phase 1 exploration area.

Since then, the Consortium has expanded efforts into three additional areas: Liza Phase 2, Payara and Yellowtail, producing new discoveries in each. In April, Exxon raised its estimate of total recoverable reserves in Stabroek to almost 11 billion barrels. This compares to a 2002 estimate by the U.S. Geological Survey that the basin could contain just 15 million recoverable barrels, a clear demonstration of how proper capital investment in exploration activities can prove such preliminary estimates by government entities wholly inadequate to accurately assess a resource play’s ultimate potential.

In a December 2019 announcement, Exxon estimated that Stabroek had the potential to achieve 750,000 barrels per day of oil production, much of which would benefit the tiny population of around 800,000 . The development is on pace to achieve that goal.

In its April announcement, Exxon detailed the following production numbers:

1. Liza Phase 1 is producing approximately 130,000 barrels per day using the Liza Destiny floating production storage and offloading (FPSO) vessel;
2. Liza Phase 2, which started production in February, is steadily ramping up to its capacity of 220,000 barrels per day using the Liza Unity FPSO;
3. The third project, Payara, is expected to produce 220,000 barrels per day; construction on its production vessel, the Prosperity FPSO, is running approximately five months ahead of schedule with start-up likely before year-end 2023;
4. The fourth project, Yellowtail, is expected to produce 250,000 barrels per day when the ONE GUYANA FPSO comes online in 2025.

All-told, these numbers indicate that if all goals are met, production from Stabroek alone could rise to 820,000 barrels per day by 2025.

The high volumes of associated natural gas produced with the oil at Stabroek has become a centerpiece of an effort by the government to mount its Low Carbon Development Strategy 2030. In addition to plans for solar farms and a major new hydropower project, LCDS 2030 includes plans for the construction of a new, 300 MW natural gas-fired power plant to replace old plants that generate electricity by burning fuel oil.

All of that economic and environmental benefit will be derived just from Stabroek, part of the larger Guyana-Suriname Basin that extends across the breadth of the offshore adjacent to the shores of those two countries. Exxon is also conducting exploration activities offshore Suriname, as are other big players like Chevron, Shell, Petronas and Apache Corp.

Taken together, these major capital investments in finding of new reserves of oil and natural gas promise to not just transform the economies of these two historically-impoverished South American states but to play a larger role in the ability of the industry to continue to meet high global demand for its products in the decades to come.

David Blackmon is an independent energy analyst/consultant based in Mansfield, TX. He is the Editor of Shale.

 

FBX Bonasika Mining project finds highest grade bauxite

Jun 05, 2022

First Bauxite LLC (FBX), described its bauxite find on its website https://firstbauxite.com/about. .

” The extreme low impurities make this bauxite stand out in a class of its own,” The company announced that the find represents the “highest quality mega bauxite find” at its Bonasika Mining project located on the right bank of the Essequibo River, Region Three,10 miles above Parika, East Bank Essequibo (EBE).

FBX via its 100 percent owned subsidiary, Guyana Industrial Minerals INC. (GINMIN), has been exploring lands for bauxite in the country since 2008 and hit the jackpot at its Bonasika concession which spans an area of approximately 18, 940 acres.

At the opening ceremony of the Bonisika Bauxite mine in February 2020, Chief Executive Officer (CEO), Bill Rice said, “The government has been with us since day one which is many years ago starting with the ability to explore this area which started when our geologists were walking down along that creek over there (pointing to an area in Bonasika) and all of a sudden saw a lot of crop and said: ‘Oh what is this material?’ and they picked it up with their hands and it turned out to be the highest quality bauxite in the world.”

The company, on its website, said that high grade bauxite has little impurities thus making it cheaper to mine and produce.

“The bauxite mined from the Bonasika mine contains a high amount of alumina and low tramp elements making bauxite economical for the production.”.

The raw bauxite ore being is 63 percent grade which is of higher quality than most found in countries across the world. When the bauxite is sintered (meaning purified by a factory), its quality jumps to the highest in the world standing at a grade of 93 percent.

This means that the products that it can make will be considered “high end” and so durable that it can last a lifetime.  The low silica and low impurities make First Bauxite’s Calcined product a superb choice for steelmaking slag conditioning.

The Bonasika Bauxite is also excellent for making strong lightweight ceramic proppants – a high quality material used in deep water well operations in the oil industry.

Citizens happy that their country is blessed with such high quality resources, have been left in the dark about the revenue they stand to gain from the export of bauxite by the foreign company.

FBX has been shipping bauxite since 2018 and citizens have no clue about the revenue that they have gained from this expensive resource being mined. The company was granted its mining licenses by a previous People’s Progressive Party Civic (PPP/C) administration but had started small scale production under the last regime.

A Partnership for National Unity + Alliance for Change (APNU+AFC), in 2018 before officially opening the Bonasika Mine in February 2020, still under the APNU+AFC.
An article published by Informed Industrial Mineral Forums and Research Ltd. (IIMFR) written by Mike O’Driscoll – an expert with over 30 years experience in the international mining industry – FBX in June 2018, shipped its first 1000 tons of bauxite from Guyana to a Chinese customer. It then followed up with a second shipment of 4100 tons of bauxite, later that same year in October to a European customer.
After officially opening the mine, the company made its first bulk export of 6,500 tons of bauxite to the USA.in July 2020 – one month before the current PPP/C took office. FBX then followed with another bulk shipment of Bauxite to Western Europe, weighing approximately 9,500 tons and since then it has been shipping Bauxite, to North and South America, China, India, Europe, Ukraine, and Africa.

O’Driscoll in his article quoted the company’s Vice-President of Sales and Marketing, John Karson, saying that ‘as their customers increase their volumes’ FBX will make larger bulk shipments and noted that ‘exports to China and India were of good value’.While the foreign company continues to enjoy success with “Guyana’s high grade bauxite,” citizens are oblivious about the contractual arrangements between the country and the foreign company.

Research by the trading websites such as, Trade-Metal.com, found “non-metallurgical grades (High Grade) of bauxite”- like the grade found at Bonasika – are rare to find outside of China and prices per ton can reach as high as US$500. Currently, according to FBX, its wash plant at Bonasika, can produce as much as 30,000 metric ton of bauxite per month.

“FBX’s wholly owned subsidiary, Guyana Industrial Minerals Inc. (GINMIN), is the mining arm producing washed bauxite at the rate of 30,000 MT per month.”

FBX is marketing the high-grade bauxite globally as a raw material for refractories, for aluminum sulphate production, as a UHSP deep-well proppant in the oil industry, plus as an abrasive and steel making slag conditioner.  That means the company may be exporting a total of 360,000 metric ton of bauxite per year.

Trade-Metal.com, on its website stated that the average price for high quality bauxite from suppliers range from US$150-US$500 per ton. If US$150 is being paid per ton of Guyana’s “High Grade” bauxite then 30,000 tons will be equivalent to US$4.5M. That means, if FBX is producing at full capacity and selling at the minimum value price then they are exporting US$54M worth of bauxite from Guyana each year. If the company is being paid more (US$500) by customers then FBX could be earning as much as US$180M in annual sales or even more.

FBX found five bauxite deposits in Guyana, Bonasika 1, 2, 3, 6 and 7.
In 6 and 7 alone, there are estimated proven and probable bauxite reserves of over 13 million tons. The company is currently mining the Bonasika 7 deposit and estimates the mine life to be about 15 years.

As it continues to export Guyana’s bauxite, FBX is exploring Guyana for more quality bauxite while the contractual arrangement remains a state secret. (Additional information sourced here: https://imformed.com/guyana-bauxite-newcomer-starts-bulk-shipments/, https://trade-metal.com/bauxite-ore-c930.html)

 

 

Commonwealth Marine Economies Programme

Funded by UK Government Enabling safe and sustainable marine economies across Commonwealth Small Island Developing States

Guyana Country review 30 May 2022

The CME Programme is designed to support sustainable, growing marine economies that create jobs, drive national economic growth, reduce poverty, ensure food security and build resilience against forces of nature. Funded by the UK Government and delivered by a partnership of world-leading marine organisations from the UK, the programme aims to ensure marine resources in Commonwealth SIDS are better understood and managed.

This review highlights opportunities where the UK can apply and leverage its world-leading expertise to make significant, cost-effective and lasting positive impacts on each country.

Relevant strategic plans International – Guyana is subject to international requirements and obligations as listed under the UN Convention on the Law of the Sea;

• Safety of Life at Sea;
• Conservation of Biological Diversity (Aichi Targets);
• SIDS Accelerated Modalities of Action (SAMOA) Pathway; and
• the UN 2030 Agenda for Sustainable Development (including Sustainable Development Goals;
  • 2 – Zero hunger;
  • 9 – Industry, innovation and infrastructure;
  • 13 – Climate action;
  • 14 – Life below water).

Regional – Relevant regional mechanisms and bodies within the Caribbean include the Caribbean Regional Fisheries Mechanism;

• Caribbean Community Common Fisheries Policy;
• Caribbean Large Marine Ecosystem Programme; and
• the Caribbean Regional Oceanscape Project.

National – National strategies for enabling the safe and sustainable development of Guyana marine environments include:

• the National Sector Policy for Sea and River Defence:
• Blue Charter, and
• the National Biodiversity Strategy and Action Plan (2012-2020).

Challenges faced Dynamic coastline and sea floor conditions –

Guyana has three large rivers emanating from the northern Amazon basin that discharge in to the Caribbean Sea on the Guyanese coast. These rivers transport significant amounts of sediment, which is deposited in the estuaries and along the coast. The seabed within these areas is consequently very dynamic and prone to rapid change over short timescales.

Management of coastal and marine environments –

The lack of up-to-date, modern data has a number of impacts on the successful management of Guyana’s marine estate. For example, to enable access to Guyana’s ports for merchant shipping, ongoing dredging is required. Currently, dredging campaigns are inefficient and lack normal assurance to guide operations.

Modern data and modernised charts are therefore urgently needed to support sustainable activity including maintenance and capital dredging for efficient trade, port development and oil and gas exploration and extraction.

2 | Commonwealth Marine Economies Programme Sustainable use of marine resources –

There is an ongoing need to support previous activities conducted through the CME Programme regarding the MSC accreditation of the seabob fishery. In particular, the impacts of climate change on marine habitats need to be better understood to develop a range of mitigation strategies for different environmental outcomes.

Advice and support on regulatory frameworks and environmental impact assessments is also needed to support policy development on resource extraction. It is also understood that there is a significant lack of data, assessments and trained staff to conduct ocean modelling and sea-level monitoring.

Safety and security –

None of Guyana’s seabed has been surveyed to modern standards. This is having a direct impact on the wider marine economy by hindering the shipping of key exports such as bauxite and timber. It is also restricting tourist access by cruise ship. To enable and encourage safe navigation for ships in Guyana’s waters, official navigational charts for Guyana need to be modernised and updated.

Hydrographic coordination and data collection –

The Guyana Maritime Administration has some seabed mapping capabilities, including staff with appropriate specialist education, but is primarily limited by inadequate survey platforms and equipment. Some government departments are also not aware of the importance to pass on data or maritime safety information to their National Hydrographic Office.

There is consequently strong potential for improving hydrographic governance, so that requirements and data are appropriately shared to derive the maximum value and benefit.

Protection and preservation of the marine environment –

Maintaining the health and biodiversity of marine ecosystems within Guyana is fundamental for sustainable development. In particular, oil discoveries within the Guyanese EEZ require improved knowledge of natural seabed resources to ensure their protection during development activities.

Climate change impact assessment –

Marine and coastal environments are vulnerable to the impacts of climate change, most notably through factors such as sea-level rise, ocean acidification and invasive species.

Sea-level rise is of particular concern in Guyana as most human settlement is concentrated in the coastal zone, and much of the capital, Georgetown, is below sea level, and so depends on dikes for protection against inundation from the Demerara River and Atlantic Ocean. Understanding, quantifying and monitoring the effects of climate change on local marine ecosystems is therefore essential for developing appropriate risk mitigation and coastal planning strategies.

Natural and environmental disasters –

Although Guyana is outside of the main Caribbean hurricane belt, it is still highly vulnerable to natural disasters. Coastal infrastructure and marine environments therefore need to be better protected from the impact of forces of nature, with improved resilience built into systems to mitigate associated risks.

Training and capacity building –

Improved awareness, skills and knowledge are required to enable Guyana to implement integrated ocean governance. There is also a need to increase both national and regional cooperation through the sharing of equipment and knowledge in order to help reduce costs and improve decision makers’ understanding. www.gov.uk/guidance/commonwealth-marine-economies-programme |

3 Guyana – Activities and benefits

By providing data, training, advice and support, the CME Programme is designed to help address economic and environmental needs, leaving a lasting legacy of self-sufficiency in marine management. Programme activities are split across six core themes, though potential action is not identified in every category in all Small Island Developing States.

Priority projects identified for Guyana include:

Marine data collection for environmental resilience and safe and efficient trade (core output 1)

Activity – High quality hydrographic data collection leading to new modern editions of navigational charts, improved compliance with international obligations and data supplied to local states. Areas of highest priority will be the approaches and lower estuaries of the Demerara, Essequibo and Berbice Rivers.

Benefits – Improving overall safety of navigation – reducing risk to lives and the environment. Enabling cargo ships to reduce their under keel clearance with confidence, therefore reducing costs and thereby increasing profit. Helping encourage cruise ships to visit. Monitoring and risk assessment to increase climate change resilience (core output 2)

Activity – Regional Climate Change Report Card.
Benefits – To provide climate change information to support effective climate change adaptation. Sustainable fisheries development (core output 4)

Activity – Support the MSC accreditation process of seabob fishery.
Benefits – To enable access to new markets where accreditation is required and increase the market price of existing products. Science infrastructure development, training and knowledge exchange (core output 6)

Activity – Provision of modern seabed mapping equipment to the Government of Guyana.
Benefits – In line with those described under Output 1, and in addition will allow for these benefits to be maintained into the future in Guyana’s dynamic seabed environments.

Activity – Work with key maritime staff to develop local hydrographic governance and create a National Hydrographic Committee or similar.
Benefits – Key elements of governance in place in line with IHO Phase 1 compliance, reducing potential barriers to international trade.

Activity – Seabed mapping data handover workshop.
Benefits – Ability of local staff to understand and utilise CME Programme acquired seabed mapping data in country.

Activity – Improve management regime for sustainable fisheries sector through data collection – leading to MSC accreditation.
Benefits – To enable local staff to be self-reliant on the accreditation process, and the ongoing monitoring required to retain accreditation.

4 | Commonwealth Marine Economies Programme

Programme outputs If all of the potential activities were to be delivered, the CME Programme, working with key departments in Guyana, would result in the following development of marine capacity by the end of the scheduled Programme.

• • Phase 1 Limited, or no, characterisation of physical parameters in marine and maritime sectors.
  • Phase 2 The physical parameters of the key marine and maritime environments and sectors are mapped and quantified.
  • Phase 3 The physical parameters are analysed in terms of the biological, sociological and economic context, resulting in a more in depth appreciation of their vulnerabilities and opportunities/ limitations for sustainable use.
  • Phase 4 Defensible policy is produced for the marine and maritime sectors that details consideration for the sustainable development of the ocean economy.
  • Phase 5 Full competency in undertaking the previous phases is developed and sustained across multiple sectors, leading to the safe and sustainable development of marine and maritime economies.

Output 1 – Marine data collection for environmental resilience and safe and efficient trade.
Output 2 – Monitoring and risk assessment to increase climate change resilience.
Output 3 – Decreasing pollution and improving human health.
Output 4 – Sustainable fisheries development.
Output 5 – Natural capital assessment.
Output 6 – Infrastructure development, training and knowledge exchange. www.gov.uk/guidance/commonwealth-marine-economies-programme

 5| Expected impact Through delivering these activities, outputs and benefits the CME Programme would help to facilitate:

• • Output 1 – Adherence to the UN convention on the Law of the Sea and Safety of Life at Sea; Reduction in the cost of imports and increase in the profitability of exports; Reduction in the risk of maritime accidents and damage to the environment; and availability of data to inform sustainable oil infrastructure development.
  • Output 2 – Identification of communities and environments vulnerable to the impacts of climate change; Integration with regional and global hazard monitoring networks; and informed coastal management and planning decisions.
  • Output 4 – Reduced pressure on existing fish stocks and marine environments; Development of new opportunities for aquaculture diversification; Enhanced economic potential of existing products; and access to insurance services following climatic events.
  • Output 5 – Enhanced awareness of the social and economic value of marine ecosystems; Quantification of the cost/benefit ratio of existing policy options, and supporting decision making.
  • Output 6 – Confidence and ability to make sound independent decisions regarding the development of marine environments; Access to state-of-the-art marine equipment, models and techniques; Development of national and international networks.

Strategic outcomes By better understanding and managing the marine resource potential within Guyana the CME Programme will help create jobs, drive national economic growth and reduce poverty through:

• • Prosperity – Diversifying revenue potential by opening up new economic opportunities.
  • Sustainability – Ensuring all marine and maritime activities are environmentally safe and sustainable.
  • Security – Making infrastructure and human capital resilient to natural disasters and climate change.
  • Legacy – Building the capacity of national authorities to plan and optimise their marine spaces.

Commonwealth Marine Economies Programme

The CME Programme is being delivered on behalf of the UK Government by a partnership of world-leading marine expertise.

1. Funded by UK Government Pakefield Road, Lowestoft, Suffolk, NR33 0HT,
2. United Kingdom www.cefas.co.uk Admiralty Way, Taunton, Somerset, TA1 2DN,
3. United Kingdom www.gov.uk/ukho European Way, Southampton Hampshire, SO14 32H,
4. United Kingdom www.noc.ac.uk King Charles Street, London, SW1A 2AH, United Kingdom

For more information please contact us via: www.gov.uk/guidance/commonwealth-marine-economies-programme

CME.ProgrammeEnquiries@fco.gov.uk |

@CME_Prog

© Crown Copyright 2018. All rights reserved. Correct at the time of design.

 

Shipping routes & waterway maps

Guyana’s economy is reliant upon its maritime shipping routes and internal waterways.

The country has three large rivers that discharge into the Atlantic Ocean, depositing significant amounts of sediment both within the estuaries and along the coast. Over 90 per cent of the population live along the coast and waterways, which form the foundation of the economy.

River transport to the coast is critical for moving agricultural produce and raw materials from Guyana’s interior for export. However, with a dynamic seabed that is prone to rapid change, Guyana was faced with high dredging costs and the ships and boats that transport cargo along the waterways to the coast and beyond did not have access to the information required to navigate quickly and safely.

Guyana’s waterways were last mapped in 1964 by the British Royal Navy. In 2016, a visit to Guyana by HMS Mersey (equipped with seabed mapping equipment) demonstrated clearly that measurements of the main shipping channel into Georgetown Port did not match what were on the charts.

Mapping Guyana’s waterways In 2018, the Commonwealth Marine Economies Programme, through its delivery partner the UK Hydrologic Office, partnered with the Guyana Maritime Agency to update the maps and depth charts of Guyana’s coast and water ways. The programme provided essential scanning equipment, as well as much needed capacity building and training.

Over two years, Guyana’s maps and charts have been updated and for the first time in its history, Guyana’s Maritime Administration (MARAD) has the capacity to undertake sea bed mapping and continue to update their maps and charts without external assistance. Making shipping quicker and safer Updating the charts has also reduced the risk of shipping lane closures.

“In the past, when boats sank, the whole area would have to be avoided because the Maritime Agency and captains did not know exactly where the wreck had come to rest,” said Troy Clarke, from the Maritime Agency. “Now we can map exactly where (the wreck) is in under 24 hours and warn mariners (of the hazard).”

Discovery of significant oil and gas reserves off the coast in 2015 also makes this Commonwealth Marine Economies intervention particularly timely. Last year, more than 100 oil and gas support vessels used Georgetown Port, Guyana’s largest maritime facility. The Maritime Agency anticipates shipping to increase significantly as oil and gas production scales up. Today, the new maps and charts are guiding the ships that provide the infrastructure support to Guyana’s offshore oil platforms.

The new seabed mapping capability will also benefit the planned development of a new deep-water port. For over a decade, discussions over potential sites have halted progress. However, the Maritime Agency was recently contacted by private sector investors who want to use Guyana’s new equipment and skills to map out potential sites. Hopefully, this will lead to a clear path forward and an economic agreement. This will benefit Guyana’s maritime economy in the future and allow them to take advantage of the significant potential of the country’s abundant natural resources.

 

 

Biggest growth in oil & gas investment this year

June 3, 2022

Rystad Energy, the independent Norway-based research and business intelligence company, has tagged Guyana as being among countries and a region that will attract most of the growth in investment in the global oil & gas industry in 2022. The report names Brazil, Australia and West Africa, as the other locations where much of the remaining investment in the sector for this year is expected to be focussed.

 

Fiscal, economic model allows for analysis of O&G sector

June 3, 2022

THE Ministry of Natural Resources has said that Guyana has a fully integrated fiscal and economic model that allows the government to analyse all the producing oil fields, as well as options for the future production of oil and gas. This model allows a good understanding of the forecast costs, revenues, and Net Cash Flow (NCF) from the sector for both the government take and contractors’  take.

Considering the country’s ability in this regard, the ministry said that an analysis of Guyana’s petroleum sector by Director of Financial Analysis of the Institute for Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo, is “inaccurate” and “misleading.”

“… with a growing population, and increasing public, private and social investments, it is extremely pellucid that the author of the article is not familiar with effective petroleum revenue management,” the Ministry said.

The ministry contended that the Vice-President Dr. Bharrat Jagdeo, was “truly clear at” his recent press conference when he spoke about the expected revenues that this country will be receiving from around 2026. He said that by that time, Guyana will be producing over 800,000 barrels of oil per day, from four producing oil fields.

“With that amount of oil being produced daily, then with a conservative price of US$50 per barrel, Guyana will see around US$2 billion in annual inflows to the state,” the Ministry of Natural Resources said.

This information, which was presented by the Vice-President, is an analysis for the future and not a review of previous years as Sanzillo wrote in the media.

“Further, it can be seen that the director does not have a full understanding of Guyana’s oil and gas sector, nor does he know the fiscal regime of the Stabroek Block,” the Natural Resources Ministry said.

The ministry said oil production started in December 2019 from the Liza Destiny Floating Production Storage Offloading (FPSO) facility with peak oil set at 120,000 barrels per day. The second production platform started in February this year on the Liza Unity FPSO which will have peak oil at 220,000 barrels per day. The third production FPSO will be called Prosperity and will have a capacity of 220,000 barrels per day, while the fourth vessel called the One Guyana will have a capacity of 250,000 barrels per day.

“Guyana’s fiscal regime for the Stabroek Block is set with a cost recovery of 75 per cent, not 100 per cent, as has been inaccurately stated by IEEFA. The royalty is fixed at two per cent and the profit share ratio is 50:50, thereafter,” the Ministry said.

Those are the facts on which the Vice-President presented his analysis and the basis for the projected fiscal outlook for Guyana.     In Sanzillo’s “verdict” on Guyana’s fiscal deficit and repayment, the Natural Resources Ministry said he fails to show any real analysis.

“The Vice-President stated in a comprehensive manner that Guyana now has one of the lowest debts in the world and that the country’s capacity to repay has now been improved with the revenues being received from the oil and gas sector.”

EFFECTIVE DEBT SUSTAINABILITY

Guyana has been doing debt restructuring and repayment under the People’s Progressive Party/Civic (PPP/C) government, with effective debt sustainability analysis.

This proves that Sanzillo has not done any proper study on Guyana’s debt repayment programme.

“The director asserted that the budget imbalance should be closed based on an IMF assessment, noting that it is a negative macroeconomic situation for Guyana. However, he failed to analyse the country’s budgetary deficit. In an emerging country like Guyana, a low budget deficit is a positive indication and important to finance infrastructure development to support future growth,” the Ministry said.

The International Monetary Fund (IMF) defines a modest fiscal deficit as three-10 per cent of Gross Domestic Product (GDP). Guyana’s budget deficit for 2012-2022 is within this range. The 2022 budget deficit is projected as 3.7 per cent of GDP. The COVID-19 epidemic caused the biggest budget deficits of 6.04 per cent and 6.74 per cent in 2020 and 2021 respectively, albeit below the 10 per cent criterion.

Budgets 2020 and 2021 earmarked large resources to mitigate the damage and boost the economy. In this context, the budget deficit was essential and well-justified, while remaining below 10 per cent of GDP. Further, even before the crisis, the average budget deficit for Latin America and the Caribbean in 2020 was nine per cent of GDP, according to an Inter-American Development Bank (IDB) analysis. Latin America and the Caribbean’s median budget deficit for 2022 is 4.6 per cent of GDP. Guyana’s budget deficit projected for 2022 is below the regional average and below the minimal sustainable standard.

“Tom Sanzillo does not understand the necessity for evidence-based analysis to influence his judgment. Tom Sanzillo’s analysis is erroneous. Guyana’s national debt and budget deficit are solid and regarded macroeconomically stable,” the Ministry said.

 

Guyana is UK’s single largest trading partner in the region

3 June 2022, 7:54 by Denis Chabrol

British High Commissioner to Guyana Jane Miller said the United Kingdom is increasing trade with Guyana, making this oil-state its single largest trading partner in the Caribbean

Addressing the Queen’s Birthday Party, she said total trade between the UK and Guyana last year amounted to 560 million pounds sterling (approximately US$703,769,568), representing 21.6 percent of all trade between the UK and the Caribbean and “making Guyana the UK’s largest trading partner with the Caribbean.”

Putting the figures into perspective, in 2011 trade between the two countries totalled 94 million pounds sterling (approximately US$118,126,858). “The trade has expanded six times in the last 10 years,” she added.

High Commissioner Miller said plans were being explored to establish a British Chamber of Commerce in Guyana.

President Irfaan Ali, who addressed the event, met business executives and British politicians in London earlier this year, a move that High Commissioner Miller says set the tone for improved trade relations between Guyana and Britain. “As a result of this visit, particularly His Excellency meeting with Prime Minister Boris Johnson, we are now in the process of developing a more formal framework that will enable a deeper relationship including for future commercial engagements.”

President Ali said major financial institutions in Britain have funds to invest in Guyana. “I was at a very important meeting with huge financial institutions in the UK and what I heard was mind-blowing; that is assessing the risk of Guyana, assessing all that has to be done. There is an envelope of resources through the UK that is there for government and the private sector that is in the hundreds of millions of pounds.”

The President said that Guyana and the UK were working to remove trade barriers to allow smooth access of Guyanese products to that market. The British High Commissioner credits the improved trading relationship to the hard work of the UK’s Department for International Trade. The UK’s Deputy Trade Commissioner for Latin America and the Caribbean visited Guyana last year. Earlier this year, a British trade mission visited Guyana and a memorandum of understanding was signed between the Georgetown Chamber of Commerce and Industry and the long-established business organization, the Caribbean Council.

Opposition Leader Aubrey Norton, Leader of the Alliance For Change Khemraj Ramjattan, City Mayor Ubraj Narine and other politicians and business leaders attended the event.

 

Vice President responds to misinformation

May 31, 2022

Vice President, Dr. Bharrat Jagdeo in a press conference, addressed inaccuracies and misinformation being peddled in the media about the oil and gas sector. He debunked comments attributed to Tom Sanzillo, Director of Financial Analysis for the Institute for Energy Economics and Financial Analysis, where he claims that every citizen owes ExxonMobil $9 million.

VP Jagdeo made it clear that, “The only debts that this country has to repay, is debts contracted or guaranteed by the state, and I told you already that’s only 16 percent of GDP. No debt contracted by Exxon or any of these companies are guaranteed or we are party… so you don’t have to pay [the citizens of this country].”

The claim that these debts have to be repaid before Guyana can receive any funds was also dismissed by the Vice President.

“So that’s not true again, because if you look at even the original agreement that was signed since 1999, you will see that there is a cut off point for cost recovery from revenue of 75 percent. So, 75 percent of revenue goes to cost recovery, including servicing and everything else, and 25 percent from day one becomes available as profit oil, of which we will get 12 and a half percent and then a two-percentage point as royalty, which gives us about 14.5 percent from day one.”

He explained that with the current Floating Production Storage and Offloading (FPSO) vessels in operation, Guyana’s share is an approximate $2 billion annually at US$50 per barrel.

“Let’s say it is $100 it’s about US$4 billion per annum the government share would be, now that is more than twice the size of our total debt now. One year’s revenue in the future will be about twice the size of our current debt level.”

The contribution of the oil and gas sector to the rest of the economy must also be examined.

“The gas that will come in, that would allow us to generate cheaper power which will have a major impact on our industries and consumers, the ability to produce the liquids, that will allow us to cut cost of living through the cooking gas, the business through the other linkages in the economy to the local content law, that will generate employment, maybe 5,000 people directly employed and a lot of business for locals that has an impact on the economy.”

He restated the administration’s vision of utilising the revenues accrued from the oil and gas industry to build national capacity.

“You have to have world class infrastructure. You have to be able to address people’s basic needs…in education, health care, community roads. Secure the country before you start saving for the future in any major way.”

On the International Monetary Fund (IMF’s) recommendation that the oil funds be used to close the fiscal deficit, reduce national debt and save for future generations, Dr. Jagdeo said this is not a feasible option , as it will not provide the best benefit to the people.

As an example, the Vice President said that Norway is regarded as the global gold standard for the management of oil and gas funds. Norway waited 30 years after it started to produce oil and gas before saving for the future, because it recognised that national capability had to be built first.

“They are considered to have been the best model. They have the largest sovereign wealth fund in the world and everyone uses Norway as the model. So, Norway started producing oil in 1967. Now, Norway, established for the first time a sovereign wealth fund in 1996, 30 years after Norway started to produce oil and gas, Norway then established the sovereign wealth fund. Norway’s per capita GDP was $2,514 in 1967. In 1996, a year it first established a sovereign wealth fund like what we have, a natural resources fund. Its per capita GDP was in excess of $37,000. Now today, our per capita GDP moved from the early 90s about $300 to $400. Today it’s $9,000,.”.

Government established an asset saving fund and a sliding scale formula, where once revenue exceeds $500 million per year, considered the de minimis level, a growing percentage of that would be saved.

“We adopted to save a bit for the future from the beginning. So, the IMF model here, what they said is pay down the deficit. If you reduce the deficit, now in this stage, that means we can’t build our highways. We can’t build the four lane roads necessary to take our traffic or we can’t build new power plants, we can’t build the ports necessary to catapult our economy to the next level. We can’t build world class hospitals and schools and universities that we need to grow our economy in the future.”

The IMF’s core job, has been balancing budgets and ensuring balance of payments sustainability, making reference to the organisation’s policy as “pro- recession”.

Guyana’s capacity to borrow is significantly greater than most countries, one of the lowest in the world and in this hemisphere.