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After US$2.3B in exploration costs: Exxon says royalties will catch up eventually
(Kaieteur News) – Guyana has so far paid ExxonMobil more to explore the prolific Stabroek block than it has received royalties since production commenced in 2019, but this grim reality is expected to change in the future according to the company.
President of ExxonMobil Guyana Limited (EMGL), Alistair Routledge recently justified the massive expenditure, although several oil producing nations do not pay for exploration activities.
EMGL President, Alistair Routledge
Kaieteur News had pointed out that Exxon billed Guyana more for exploration than it has paid royalties and asked the company if it enjoys such a privilege in any other nation. While he did not give a specific answer to the question, he tactfully responded, “I think you’re comparing two numbers that doesn’t really make sense to compare.”
The Exxon Guyana President went on to explain that royalty payments to Guyana will continue to grow over the years as production increases. On the other hand, he said, “Exploration is often the money you spend at the very beginning of any of license, because you can’t produce and you can’t generate the royalties unless you’ve actually discovered and then developed the resource.”
Notably, Exxon is still conducting exploration activities in the Stabroek Block. While Routledge did not make mention of a single country where the company enjoys such benefits as in Guyana, he noted, “So it’s not unusual for us to be front-end loaded if you like, on exploration expenses. That’s very normal in the industry. What I can assure you is that over the life of this asset, it will be more royalty than exploration.”
This newspaper reported last week that Guyana has been handed a bill for approximately US$2.3B by Exxon, but to date, the country has accumulated less than US$1B in royalties since production commenced in 2019.
Oil producing countries such as Suriname have blocked oil companies from recovering costs spent to hunt for oil. Guyana on the other hand not only allows Exxon to recover costs for wells successfully drilled, but even dry holes encountered in the process.
Before production activities commenced, Exxon claimed US$1.6B for exploration activity in the Stabroek Block during the period 1999 to 2017. Additionally, the company’s Annual Reports and financial statements for the period 2020 to 2024 show that another US$666.1M was racked up again for exploration activity. It was reported that in 2020, some US$100M was spent to explore the block.
Meanwhile, in 2021, the company said US$131.2M was spent and another US$43.7M in 2022. Moreover, Exxon handed Guyana an additional US$277.5M and US$113.7M in 2023 and 2024, respectively.
This means Guyana has received a whopping US$2,266,100,000 for exploration works by the oil major. Since the country commenced producing oil, it has received less than US$1B in royalty, as at June 30, 2025. The Natural Resource Fund (NRF) second quarter report, published by the Bank of Guyana indicates that by the end of June 2025, Guyana’s total 2% royalty, since the inception of the Fund, only amounted to US$955,781,444.
The sweetheart deal signed by ExxonMobil in 2016 allows the company to recover costs related to its exploration activities, even if those efforts do not produce oil. Additionally, the contract stipulates that the contractor shall pay 2% of all petroleum produced and sold, to the government as royalty. This provision, along with several others have been criticised by both local and international experts in the past, who are adamant that all companies take on financial risk as the cost of doing business where they operate.
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