‘PPP/C victory in Exxon’s interest’

Sep 09, 2025 News

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…lopsided oil deal safe – Int’l analyst

Kaieteur News – Oil and global market watchers are betting on the PPP/C to keep in place the unfair terms in the lopsided ExxonMobil contract, saying that its success at the general elections would guarantee continuity of development of the oil sector without any changes to policy.

And while they believed a government led by either the PNCR or the AFC would also promote growth of the oil and gas and infrastructure sectors, it said those parties would be more likely to review the terms of existing oil contracts, tighten environmental requirements and consider increasing oil royalties.

S&P Global, a leading U.S. corporation providing transparent and independent data and analytics to the global capital and commodity markets provided this analysis in the lead up to Guyana’s recently held elections, which saw the President Irfaan Ali-led PPP/C ticket emerging victorious snapping up 36 seats to control the 65-seat legislature here. The PPP/C Government has resisted calls for changes to the 2016 oil contract that governs operations of the Stabroek Block. The deal with ExxonMobil has been widely condemned by international and local experts.

In its manifesto the PPP/C pledged to accelerate oil and gas exploration by concluding Production Sharing Agreements (PSAs) with successful bidders from the 2022 auction under new and enhanced terms. This will bring new blocks into accelerated exploration and, ultimately, production. The party also plans to complete 3D seismic surveys across unlicensed blocks and operationalize a Petroleum Data Repository to enhance the basin’s marketability. To further ramp up exploration and production, more international auctions of additional blocks will be conducted. It must be noted that the new terms are not applicable to the lucrative Stabroek Block, where it is believed most of Guyana’s oil is.

The Stabroek Block, which spans 6.6 million acres and holds about 11.6 billion barrels of oil equivalent, is operated by ExxonMobil Guyana Limited (EMGL), which holds a 45% stake. Its partners are Chevron (formerly Hess) with 30% and CNOOC with 25%.

In its analysis that was published on September 1- the same day Guyanese went to the polls, S&P Global noted that there were no publicly available formal election polls, “but our in-country sources, local media and informal polls indicate that Ali (President Irfaan Ali) maintains public support due to infrastructure investment and social spending funded by oil revenues and backing from Guyana’s main ethnic groups,” the corporation said.

It noted too then that the main opposition parties — the People’s National Congress Reform (PNCR) led by Aubrey Norton and the Alliance for Change (AFC) led by Nigel Hughes—”remain divided and have been unable to form a coalition to challenge the government due to leadership differences.” “In the event of a PPP-C victory, broad policy continuity would be likely, including continued development of the oil sector. An opposition government (led by either the PNCR or the AFC) would also promote growth of the oil and gas and infrastructure sectors but would be more likely to review the terms of existing oil contracts, tighten environmental requirements and consider increasing oil royalties,” S&P Global concluded in their analysis.

Campaign promises

During the elections campaign all of the parties promised changes to the oil contract in their manifestos except the PPP/C. The We Invest in Nationhood (WIN) led by Busiessman, Azruddin Mohamed had pledged to seek fairer terms from the 2016 Production Sharing Agreement (PSA) if he had won the polls. At a news conference when pressed on WIN’s plans to review the oil and gas framework Mohamed, said, “we will engage with ExxonMobil when we take office, and we will try to ensure that we can ring- fence some of the projects, we’ll discuss this with them.” A ring-fencing provision would require that only costs related to a specific development are recovered from that project once oil production begins. This would prevent ExxonMobil from charging unrelated expenses to the cost bank and help ensure a larger share of revenue is available for Guyana. Currently, the deal lacks such a provision and the Irfaan Ali led administration has approved new oil projects for Exxon without inserting a ring-fencing provision. Further, the current agreement governing the Stabroek Block offers favourable terms to the oil companies. Under the PSA, the consortium can recover up to 75% of oil produced to cover investment costs. The remaining 25% is split equally between Guyana and the consortium, with each receiving 12.5%. From that, the consortium pays a 2% royalty to Guyana. Of Guyana’s total 14.5% take, the government is also responsible for paying the oil companies’ taxes. The deal also stipulates that the amount equivalent to the taxes owed by the oil companies must be paid by the minister responsible for petroleum to the Commissioner General of the Guyana Revenue Authority (GRA).

For their part, the AFC had vowed sweeping changes to the contract, promising to establish a National Petroleum Commission and pursue renegotiation and ring-fencing provisions. It must be noted that it was AFC founder, Raphael Trotman who was the Minister of Natural Resources at the time when the coalition signed the 2016 Production Sharing Agreement (PSA) with ExxonMobil. The 2016 PSA stipulates that the Minister responsible for petroleum must pay the equivalent of the companies’ income tax to the Guyana Revenue Authority (GRA) on their behalf. Under the agreement, up to 75 per cent of oil production is used to recover costs, the remaining 25 per cent is considered profit and is split equally between Guyana and the consortium, giving each 12.5 per cent. However, the consortium pays a 2 per cent royalty from its share to Guyana. From Guyana’s 14.5 per cent total take, the government must pay the oil companies’ taxes.

The AFC said too that environmental protection will be prioritised, along with the building of the country’s local capacity and long-term national planning, to ensure there is equity and every citizen benefits. “Within 30 days of assuming office, we will initiate renegotiation of the Stabroek Block Production Sharing Agreement (PSA), including transitioning to a new model that ensures Guyana receives its fair and proportional share of oil revenues. Introduce ring-fencing provisions to ensure cost recovery is limited to each project, guaranteeing faster revenue flows to Guyana,” the policy says.

APNU had pledged to engage ExxonMobil on the Stabroek Block Production Sharing Agreement (PSA) to secure greater benefits for the country. APNU also stated that it aims to amend the Natural Resource Fund Act to guarantee savings for future generations and “when oil prices are low,” the party said. Additionally, the party said that it is committed to publishing all government contracts related to the oil and gas sector and other major projects, and to establishing a professional and independent Petroleum Commission.

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• Contract, Exxon, Guyana’s oil ships, Liza Unity, lopsided, PPP/C

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