World Bank approves US$20m credit to develop oil and gas sector

THE World Bank board of executive directors has approved a US$20 million International Development Association credit facility to enhance the legal and institutional frameworks of Guyana to manage the developing oil and gas development in the country.
World Bank approves US$20m credit to develop oil and gas sector  World Bank approves US$20m credit to develop oil and gas sector  World Bank approves US$20m credit to develop oil and gas sector  World Bank approves US$20m credit to develop oil and gas sector  World Bank approves US$20m credit to develop oil and gas sector

World Bank president David Malpass

 
Guyana is now among the 25 largest oil reserve-holders in the world after a series of discoveries which started in 2015, and the country's GDP growth thanks to its new found resources is project to rise from 4.6% in 2019 to 34% in 2020. 
 
The funds will not be used to finance upstream oil and gas, but will be used across four areas of development, starting with the enhancement of legal frameworks and stakeholder engagement. 
 
The legal component aims to update of Guyana's oil and gas laws to increase governance and oversight of the oil and gas sector. 
 
"Well managed oil revenues can have a transformative and sustainable impact on a country's development," World Bank country director Tahseen Sayed said. 
 
"Guyana today has an extraordinary opportunity to reduce poverty and bring long-term benefits to its people." 
 
The project will also build the capacity of key institutions including the Department of Energy, an Environmental Protection Agency and overhaul the Ministry of Finance for prudent management of oil revenues.
 
Government authorities such as the Department of Energy will be given immediate technical support, critical workforce training, and data management processes.
 
The World Bank said it would also "provide support and build the Guyana government's financial management, safeguards management, and monitoring and evaluation capacity."
 
The Guyanese government will receive nearly 50% of the total cash made from the country's oil production under an agreement it struck with ExxonMobil, which could have major benefits for 800,000 people living there. 
 
Maximum revenue from the project won't occur until the 2030s, when the Guyanese government could begin take $15 billion a year, on 60-40 split. 
 
The International Monetary Fund has previously suggested that Guyana's terms are too favourable to the oiler. 
 
Over the last handful of years the government of Guyana has been grappling with how to manage the influx of oil and gas explorers and producers. 
 
Its Department of Energy was only established in September last year, and the minister of state Joseph Harmon was forced to put block auctions "on hold" until the department has a "better sense…of the lay of the land." 
 
The announcement from the World Bank comes just a month after the nation's oil prospects were upgraded by Eco Atlantic Oil & Gas by a further 3.98 billion barrels of oil. 
 
That's on top of the more than 5 billion barrels of oil equivalent estimated by ExxonMobil for its Stabroek Block. 
 
In June last year, the World Bank Group approved a US$35 million development policy credit to support the preparatory work for the country to benefit from its newly discovered oil and gas reserves and transform its oil wealth into human capital, bringing its total investment to over $55 million over the last 12 months.