Guyana’s mysterious Oil Depletion Policy

May 24, 2025 Features / Columnists, Peeping Tom

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Peeping Tom…

Kaieteur News- In the face of concerns over declining oil prices, Vice President Bharrat Jagdeo continues to offer the Guyanese people hollow assurances wrapped in economic jargon and political evasion. His latest defense of the government’s approach to oil production—particularly its secretive depletion policy—exposes a troubling level of recklessness in the stewardship of the country’s most valuable asset.

The absence of a written depletion policy is not a minor oversight. It is a catastrophic dereliction of duty. The depletion policy of a resource-rich nation is its long-term compass—guiding how much of a finite natural resource is extracted, when, and under what conditions, to maximize economic, social, and environmental returns. For Guyana not to have a written and publicly available depletion policy is to admit that the nation is developing its most consequential resource with a blindfold on.

Worse still is Jagdeo’s claim that this so-called policy has been “carefully calibrated.” By whom, exactly? ExxonMobil and its partners? Foreign consultants on loan from oil majors? If a calibration process did in fact take place, why is it not public? Why is Parliament not involved? Why is there no White Paper?

In democratic governance, transparency is not a luxury. Yet here we are, years into production, with billions in oil revenues flowing, and the public remains in the dark about the rules—or lack thereof—that govern the depletion of their petroleum resources.

When asked about the policy at a press conference, he scoffed at the idea that depletion policy should respond to “short-term movements” in oil prices. He mockingly suggested that it would be foolish to revise policy every time prices move from US$80 to US$90 or dropped to US$60. This is a deliberate mischaracterization of what depletion policy entails.

The notion that a country should not adjust its depletion policy based on short-term price movements is a gross oversimplification. While it is true that sound policy should not be reactive or erratic, a well-crafted depletion strategy must include built-in flexibility to respond to significant price fluctuations—whether upward or downward. To suggest otherwise is to ignore the basic economics of extractive industries, where timing production to market conditions can dramatically influence revenues, investment returns, and long-term fiscal stability

No one is advocating for daily or even quarterly shifts in production strategy. What critics are rightly calling for is a clear, transparent, and adaptable framework that allows for dynamic management of production based on long-term price trends, fiscal needs, environmental considerations, and intergenerational equity. This is standard practice in serious, resource-rich countries. Norway has done it. Chile has done it. Botswana has done it. Guyana, it seems, has handed the keys to Exxon and walked away.

The argument Jagdeo once floated—that Guyana must pump as much oil as fast as possible to capitalize on high prices before the world transitions to renewables—has aged poorly. It was flawed from the start, grounded in an exaggerated narrative about an imminent end to fossil fuel demand. But now, with the U.S. under a Trump administration that is actively reversing climate commitments and global demand for oil holding steady, the rationale collapses under its own weight. The world’s largest economy is no longer on a clear path to decarbonization. The so-called “window of opportunity” for oil exports is not closing as fast as Jagdeo claimed, if it is closing at all.

Moreover, the recent 20% plunge in Brent crude prices—from US$82 per barrel in mid-January to US$66.25 by May 19—is a sobering reminder of the volatility that characterizes global oil markets. This price drop has profound implications for Guyana’s earnings.

Exxon can choose to store oil or delay sales of its take of oil. Guyana cannot. We sell when they pump, and we take the price the market offers. Without a depletion policy that gives the State authority over production volumes based on pricing, we are price-takers in the most vulnerable sense.

This situation is not only bad economics—it is immoral. Guyana’s oil belongs not just to this generation but to future ones. A depletion policy is not merely a technocratic exercise. It is a moral contract between the present and the future. It should be crafted through public debate, grounded in law, and accountable to Parliament. It should balance immediate fiscal needs with long-term national development goals, including environmental sustainability and economic diversification.

Instead, we have a government that has allowed an oil consortium to dictate production levels. This is the clearest path yet to Guyana squandering its one shot at transformative wealth.

Countries like Venezuela, Nigeria, and Angola offer sobering cautionary tales of squandered resource wealth. Guyana has a chance to chart a different path—but only if it confronts the truth about how little control, it currently has over its oil sector.

Any casual dismissal of the question about Guyana’s depletion policy is not just a policy failure. It is failure of leadership. And it is surrender to the oil companies who seemingly dictate the levels of production.

Guyana deserves better. The people of Guyana deserve more than vague claims of “careful calibration.” They deserve a policy—written, debated, transparent, and enforceable. Anything less is a betrayal of the national interest. And for that, the government must be held to account.

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