Green Paper proposing spending, investment of oil $$ approved

first_imgNatural Resources FundBy Jarryl BryanA Green Paper on the Natural Resources Fund has been presented to Cabinet by Finance Minister Winston Jordan; and it has been approved, with Government stating that a consultative process will be used to determine areas of spending for the fund.This is according to State Minister Joseph Harmon, who made the disclosure during a post-Cabinet press conference on Monday. Harmon spoke of the different proposals contained in the fund, including suggestions for allocation of the resources.“The intention basically is to ensure that the revenue which comes from oil goes into that fund. And it is that fund which will fund budget estimates, so that projects identified for budgetary support will get that support through the fund,” he explained.The next step, Harmon explained, is for the paper to be presented to the National Assembly.Asked to give details on exactly what areas of spending have been proposed, Harmon said it would be used to fund “budgetary programmes”.“So the proposal is that all revenue will not go directly to any particular sector, but it will go directly through the fund. And then the Ministry of Finance, in preparation for the budget, will call upon the fund projects that are being identified. So that’s the way it’s going to be,” Harmon pronounced.“Insofar as investments are concerned, right now we haven’t made any decisions as to the entity that will be managing that process, but the investments basically are intended to be safe investments; so that the money just (doesn’t) remain there, that it is invested in face investments that will allow the country to benefit from this fund.”According to Harmon, the money will go towards ‘safe’ investments. He assured, however, that prescribing the amount going towards investment and the amount going towards development will be determined during consultations.Finance Minister Winston Jordan had informed reporters last month that the Green Paper – a report on Government’s proposals – was presented to Cabinet to be reviewed. Jordan had noted that a second review would have been done at the next Cabinet meeting, on July 31.“We will revise the paper in time for presentation to the last Parliament, which is on or before August 10, 2018,” he explained, adding that the draft legislation for the Fund is with the Attorney General’s Chambers.“Once the AG’s Chambers are finished with that bill, it will get its review at Cabinet, and then we will put it out for consultations. We will take back whatever comments, and then we will revise the bill and make it ready for Parliament,” he had explained, adding that the bill would be laid in the National Assembly by the year’s end.Stabroek BlockThe Stabroek Block is 6.6 million acres (26,800 square kilometres). Esso Exploration and Production Guyana Limited is the operator thereof, and holds a 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds a 30 per cent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 per cent interest.A contract was inked on October 7, 2016 between the coalition Government, ExxonMobil and its partners in the Stabroek block. In the renegotiated contract, which has come in for some criticism, Guyana agreed to a two per cent royalty for every barrel of oil, a 50 per cent share of profit oil, and a US$18 million signing bonus.Out of the contract, Guyana also secured the company’s agreement to set up a fund for social and environment projects. Exxon has to contribute US$300,000 per year to this fund. The sums roll over, and the company, together with Government, will determine which projects to fund.The contract sets aside another US$300,000 per year to ensure Guyanese personnel are trained at local or overseas universities and conferences. There are also provisions for a continuous review of local content.Only in late February, ExxonMobil had announced its seventh oil discovery at its Pacora-1 well. The company had said it encountered approximately 65 feet (20 metres) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,363 feet (5597 metres) depth in 6781 feet (2067 metres) of water.With all these discoveries, ExxonMobil has since increased its estimate of the discovered recoverable resource from a previous estimate of 3.2 billion oil-equivalent barrels to in excess of 4 billion.There is also talk of a third phase of development (the company has done evaluations and applied for permission to begin a second phase) and consideration of two additional phases.last_img read more