Guyana set to earn billions from increased oil prices

As Guyanese motorists struggle to cover the cost of a full tank of gas, it is easy to miss the fact that Guyana is expected to earn billions from the spike in oil prices over the past few months. Oil prices today stand at $10 per barrel of crude oil (BBL). This is $30 and 43% above the average 2021 price of $70 BBL.

With Guyana’s current production capacity of 340,000 barrels per day, Guyana can earn as much as GYD $380 billion over the next year at the current price. The $30 increase per barrel accounts for $110 billion of that total.

With the $30 increase, the value of total oil exports in 2022 could be as much as $4 billion above what the average price in 2021 would have allowed. Total revenues can be up to USD $12 billion in 2022. This increase would drastically reduce the time it takes for Exxon and its partners to recover the USD $9.5 billion total invested in the Liza Destiny and Liza Unity FPSO developments.

Cost recovery is very important to Guyana’s oil industry, with 75% of total revenues going to cost recovery until the investment cost is recovered. At current prices Exxon and partners would recover total cost before the end of the year. This would allow for Guyana’s share of oil revenues to reach over 40% of total earnings.

As the oil industry enjoys significant benefits from the price increase the general public suffers unsustainably high fuel prices and a rapidly rising cost of living. People are calling on the government to use the increased oil revenues to help cushion the impact of skyrocketing living costs.

More, In The Ring.