Guyana to create wealth fund ahead of oil boom

The wealth fund is intended to insulate Guyana from the ‘resource curse' that has plagued other oil producers in the past

Emerging oil producer Guyana plans to establish a sovereign wealth fund by December, ahead of ExxonMobil's launch of deepwater production in 2020.

The Inter-American Development Bank (IDB), the IMF and the World Bank are assisting Guyana to establish the fund.

"Stabilisation is particularly important for resource-rich countries, dependent on natural resources, as commodity prices are volatile and production levels can be difficult to predict," Guyana's finance minister Winston Jordan says. "A key function of our sovereign wealth fund is savings, to ensure the equitable distribution of assets from the extraction of non-renewable resources across current and future generations."

The fund is intended to insulate Guyana from the "resource curse" that has plagued other oil producers in the past, the government says.

Guyana expects to receive initial oil revenue of about $375mn/yr, equivalent to 10pc of its GDP last year.

ExxonMobil catapulted the small South American country into the limelight with its basin-opening Liza discovery in the Stabroek block in 2015. It has since gone on to make an additional seven discoveries. The firm estimates that it has found at least 4bn bl of oil equivalent (boe) of recoverable resources, enough to support over 750,000 b/d of crude production by 2025.

The first 120,000 b/d of capacity is due on stream in 2020. ExxonMobil operates the Stabroek block with a 45pc stake. US firm Hess holds 30pc, and the remaining 25pc belongs to China's state-controlled CNOOC.