‘Guyana could have received at least US$13B to date from oil’

Jan 14, 2025 News

—Chartered Financial Analyst

Kaieteur News- Guyana has lost at least US$6.5B in oil revenue between the period 2020 and 2024, due to the lopsided terms of the 2016 Production Sharing Agreement (PSA).

This “conservative estimate” was highlighted by Chartered Financial Analyst, Rennie Parris in his column published on Monday in Kaieteur News, ‘Talking Dollars and Making Sense’.

Parris’ academic credentials include a Bachelor’s in Finance and a Master’s in Real Estate from Baruch College, complemented by an MBA in Strategic Management from The Wharton School at the University of Pennsylvania. He holds the prestigious Chartered Financial Analyst (CFA) designation, recognized globally as the highest qualification in the finance industry.

His 18-year career spans some of the world’s leading financial institutions, including S&P Global and JP Morgan. In his first column for 2025, the Analyst explored the terms of the 1999 Agreement and compared it to the 2016 PSA signed by the previous administration.

‘Guyana could have received at least US$13B to date from oil’

Chartered Financial Analyst, Rennie Parris

Parris described the failure by the Coalition government to secure better terms for Guyanese as one of the most significant acts of incompetence in the country’s independent history. “In my view, the 1999 agreement made sense for its time. Guyana was a high-risk exploration country, and the terms reflected that. However, the 2016 agreement failed to adjust to Guyana’s new reality as a proven oil producer. The government had significant leverage to negotiate better terms but settled for an agreement that left billions on the table,” the Analyst explained.

For instance, he said that had the government reduced the cost recovery cap to 60%, insisted on a signing bonus of US$800 million, implemented ring-fencing, demanded a 5% royalty, and ensured the oil companies paid its own taxes, Guyana could have gained at least an additional US$6.5 billion in oil revenues between 2020 and 2024.

Parris was keen to note, “If it weren’t for the 2016 petroleum agreement fiasco, the country would have received at least US$13 billion, double the amount earned during that period…this conservative estimate highlights the lost opportunity to maximize the nation’s benefit from its resources.”

In an interview with this newspaper on Monday, the Chartered Financial Analyst contended that the country could have bargained for at least 25% instead of 14.5% of the revenue. He said the country’s take from the fiscal pie could have been increased through the measures outlined by him. By capping cost recovery to 60%, the remaining 40% (profit oil) would be available to split with Guyana. This means the country would have been receiving 20% of profits and 5% royalty, in addition to taxes from the Stabroek Block Co-Venturers.

Parris in his column argued that despite the massive Liza discovery, the 2016 Petroleum Agreement retained many of the same terms as the 1999 agreement. While it introduced a 2% royalty and a signing bonus of just US$18 million, the Analyst noted that the core terms remain unchanged.

He said, “Everything changed in May 2015 when Exxon announced a massive oil discovery at the Liza-1 well in the Stabroek Block. With an estimated 700 million barrels of oil equivalent (BoE), Guyana’s risk profile transformed overnight. The discovery proved that Guyana had oil in commercial quantities, significantly reducing the risk for future exploration and production.”

Be that as it may, the Coalition accepted the terms widely criticised today while the incumbent administration has refused to engage the contractor for a better deal. According to the analyst, “until political leaders acknowledge this mistake, apologise to the Guyanese people, make amends for this colossal error in judgement, they should not be trusted with public support. If they continue to defend the 2016 agreement, it’s a sign that they prioritise other interests over the nation’s welfare.”

(‘Guyana could have received at least US$13B to date from oil’)

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Analyst, Guyana, oil sector, Parris, renegotiation

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