See full statement from GOGEC:
The Guyana Oil and Gas Energy Chamber (GOGEC) welcomes the Guyana National Budget, reflecting the Government’s commitment to creating a progressive and equitable society for all Guyanese. GOGEC wishes to thank the Minister of Finance, Hon. Dr Ashnie Singh and his team tirelessly prepared and delivered one of the most compelling national Budgets, of G$553B, in Guyana’s history, without any new tax.
Since the commencement of oil production in December 2019, the amendment and operationalization of the Natural Resource Fund (NRF) Act 2021 paved the way for the first drawdown from the fund to finance the national Budget 2022.
In the Hon. Dr Ashni Singh’s detailed speech, we are pleased to see critical facets of the revised Low Carbon Development Strategy (LCDS) slated for implementation over the year. Particularly for enhancing energy access, affordability, and a commitment to transitioning to renewable energy in the face of prolific performances in our new offshore oil sector.
The oil and gas sector will continue to drive strong double-digit growth over the medium term. In 2022, production capacity is expected to increase to 340,000 barrels per day (bpd) from 120,000 bpd, with Liza Unity FPSO coming on stream in early 2022.
The current estimate of the gas reserve is 16 trillion cubic feet (Tcf), with projections from Liza 1 and 2 likely at 50 million standard cubic feet per day (mmscfd). Payara will bring an additional 20 mmscfd.
In the third quarter of this year, the Government will hold its first-ever competitive bidding rounds for available acreages of offshore blocks. This is a critical step towards enhancing the value capture from available blocks transparently and optimally. Based on projections of oil production, oil revenues are expected to reach US$958m by the end of 2022 and US$1.8b by the end of 2025.
GOGEC welcomes measures to reduce the fiscal disparity between local and foreign companies operating along its value chain. These measures will further accelerate the participation of local firms in the sector. The revised Local Content Act will support the convergence of national and foreign interests in our finite resources’ equitable and sustainable development for generations to come. This is a solid adherence to the Natural Resources Governance Institute (NRGI) precept 5 (local effects) and precept 10 (private sector development).
Greater support to small businesses in the Budget will continue to nurture start-ups and position young Guyanese in the pathways for partnerships and knowledge transfer with foreign partners. GOGEC encourages continued investment by both Government and private sector in prioritizing ISO certifications to comply with globally recognized standards in services essential to harness the immense forward and backward linkages afforded by the oil and gas sector.
Similarly, the commercialization of the various offshore discoveries will strongly impact the labour market dynamics of the Guyanese economy. In particular, the demand for oil and gas-related skills will increase as the oil and gas industry becomes more entrenched in the productive economic landscape of Guyana. Thus, we applaud the Government expanded investment in education at all levels, including Technical and Vocational Institutions.
GOGEC see the push towards a low carbon economy as a necessary measure in this new Climate paradigm. We are pleased to see the injection of funding to accelerate the development of the transformative gas-to-energy project and the Amaila Falls Hydro Power Project. These strategic investments will unlock private sector transformation that embraces more significant value creation through light and heavy processing and a more diverse and modernized service sector and digital economy.
The small scale hydro projects at Kumu, Moco Moco, and Kato; and off-grid solar projects will significantly improve access to affordable energy services with high-quality standards to develop the communities in the interior. Establishing a coordinated approach for the electrification of the interior is commendable. It seeks to narrow the disparity between rural and urban areas and pave the way to a robust digital future for our indigenous peoples and rural communities.
For future consideration, GOGEC wishes to engage with the Government to better leverage private sector participation in the accelerated diffusion of renewable energy technologies, including e-mobility solutions. The initiative to implement Electric Vehicle (EV) charging is excellent and sets an example for the shift to a more sustainable and environmentally friendly country. However, It is recommended that the Solar EV charging stations be implemented across all government buildings and for Government vehicles to lead the shift to a fully electric vehicle fleet.
Government should consider a reduced tax rate for hybrid and plug-in hybrid vehicles. This will encourage customers to purchase more environmentally friendly cars, therefore, reducing the emission of CO2. Also, to further expand the ecosystem of enabling policies, the Government may consider subsidies for installing the Solar PV configurations for residential EV charging. Measures should be extended to the complete solution, which includes: panels, inverters, transformers, and batteries.
GOGEC looks forward to advocating for the equitable development of all energy resources and the households and industries that rely on them. In this manner, GOGEC continues to applaud proactive policies set out in the National Budget and the Low Carbon Development Strategy.
