-as payment of royalties expected by year-end
GOVERNMENT will soon establish the account for the Natural Resource Fund (NRF) in order to receive the impending royalties from ExxonMobil.
“We are excited that oil is close and as a matter of fact I am about to establish the account, the NRF account to receive the royalties…we should get started next month, as long as the oil comes through,” said Minister of Finance Winston Jordan in an invited comment on Wednesday.
HESS Corporation, a partner of ExxonMobil which holds a 30 per cent interest in the Stabroek Block, had announced that first oil in Guyana can begin as soon as December, ahead of the previous March 2020 timeline.
In light of that development, Minister Jordan believes that it is time for the account to be created in order to receive royalties, which are expected between mid and late December.
“We are not waiting to hear from them…we have to cater for our portion of the oil, royalty and profits…it is our priority to make certain we get that and safely keep that in the account until it is ready to be activated.
The account, which is being established, is a regular account at the Bank of Guyana (BoG) which will be called the NRF account. It will receive the money and then post-elections (March, 2020), Government will be able to establish all the committees which will be in charge of investing the money.
When asked how much royalty is expected, the minister said the amount will depend on the function of price and the barrels of oil.
“Royalties have to do with production and you get two per cent based on the price at the time,” said Minister Jordan.
It is estimated that there is over six billion barrels of oil equivalent in the block, while the involved partners continue to see “multibillion barrels of additional exploration potential.”
HESS had noted that Exxon’s and its partners’ 14th discovery was announced on the Stabroek Block at the Tripletail-1 exploration well; the well is located approximately three miles north-east of the Longtail discovery. The Tripletail discovery adds to the six billion barrels of oil equivalent.
The Liza Phase 1 project will produce up to 120,000 barrels of oil per day at peak rates utilising the Liza Destiny FPSO. It is expected to generate over $7B in royalty and profit-oil revenues for Guyana over the life of the project. The Noble Bob Douglas drillship is currently completing development drilling operations for the Liza Phase 1 development.
Guyana and ExxonMobil had entered into an agreement which will see Guyana receiving a 50/50 profit and a two per cent royalty.
President David Granger had signed into law the Natural Resources Fund Act No. 12 of 2019, which was passed by the National Assembly. The Act provides the legal framework for establishment of the Natural Resources Fund, which will manage the natural resource wealth of Guyana, said then Minister of State, Joseph Harmon.
“It will manage the wealth of Guyana for the present and future benefit of the people and for the sustainable development of the country,” said Harmon, adding that it is part of preparation for the imminent oil wealth.