Royalties to catch up

Oct 26, 2025 Features / Columnists, The GHK Lall Column

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Hard Truths by GHK Lall

(Kaieteur News) – Royalties will catch up eventually with the multi-billion-dollar exploration costs that are outracing Guyana’s collections of its 2 percent pittance.  I give a big hand of appreciation for the comforting words of Mr. Alistair Routledge, Exxon Guyana’s super chief.  As the numbers stand now, Exxon’s exploration costs exceed Guyana’s total royalty collections by approximately US$1.3 billion.  Respectfully, Mr. Routledge, that’s a long, hard road to travel.  Consider the numbers, other factors.

Royalties will make up for lost ground given time, said Mr. Routledge.  When will that be, sir?  In the last six years, Guyana’s royalties totaled US$955 million.  Or approximately US$160 million in royalties on average per annum; but with increasing production, more coming in recent years.  All things being equal, should that stand, then it would require about eight years for Guyana to come within reach of the US$1.3 billion gap between Exxon’s exploration costs and Guyana’s royalty take.  Production is set to increase, but what if oil prices don’t cooperate?  The net effect on royalties could be a minimal increase, at best.  Also, while exploration costs have started to decline, there should be new oil projects between now and October 2027, and with their share of costs contributing to the cost pool.  With significant oil infrastructure already in place in the Stabroek Block (technology, equipment, skills, environmental knowhow), new exploration costs should be less.  Still, they serve to slow down that catching up and exceeding exploration costs.  I foresee a situation where the goalposts keep moving during the game.

The probability of Exxon having a drought of projects, and the Guyana Government drawing a line in saying, not one more damn oil project (until and unless…) is not going to happen.  And what, let that licence to operate in the Stabroek Block die on the vine?  And what, let that massive bonanza of 75 percent of expenses recoverable from the top (royalty treatment notwithstanding) go to waste?  I think not.  Because it is only if there are no new oil projects in the next two years, that the 2 percent royalty could make some strides to ease the gap with exploration costs, while oil prices hold steady.  I struggle to believe that Exxon will be a standstill.  Thus, catching up has, at best, some years to go.  There are dummies, and then there are dummies.  Please leave me out of either category.

Separately, it’s becoming increasingly difficult to determine from where the foundations of Mr. Routledge’s presentations, the logic of his thinking, come. New oil discoveries stand as one blot.  Audit objections by the company doesn’t leave it looking good.  Then there is the riddle that is a mystery wrapped in an enigma; Guyana’s version.  How about taxes, tax receipts, tax certificates, tax credits, and tax applications to fit that Churchillian extravaganza?  Frankly, and with all proper regard for Mr. Alistair Routledge, I am getting tired of all these gyrations, these Jamaican dancehall exhibitions by an American in Guyana.  From one American to another, I extend this courtesy: stop the music, this kind of music that offends.  Offends the spirit.  Offends the intelligence.  Offends the vision of a different Guyana, and a different and better American oil partner.

Now, I cast my eyes in the direction of the Guyana Government.  I think that it is time something is done about the Exxon Guyana Country Head.  To my regret, I have watched him fall from the heights to the depths, a man in freefall descent, into what diminishes himself.  I feel for him, for he has been given that big basket that doesn’t hold liquids to do an impossible job.  It may be fine for him to twist himself into knots due to that dedication to duty that is of an exceptional American (and oil) standard.  But it is not fine at all for Mr. Routledge to take Guyanese for granted as he has done, and not just once.

What do these investors cum partners believe of Guyanese?  It could be that the owners of this immense patrimony are still stuck in a Fred Flintstone state of mind; that that’s the extent of their thinking, will never go beyond.  To put differently, throw them a pint of kerosene and they will be happy for the benevolence of their masters, the superior thinkers in their midst.  I regard Mr. Routledge well.  From an Exxon perspective, he has held the line, no matter how sketchy and shaky.  From a Guyanese perspective, Mr. Routledge’s lines are now crossing him up and causing him to trip.  To the distaste and detriment of Guyanese.  That’s a problem for me.  Royalties will catchup with exploration costs.  The question is when.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)    

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• Exxon, GHK Lall, Guyana Oil, Oil Royalty

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