Latest update September 15th, 2026 10:20 AM
New PSA mirrors Stabroek Block blunder
…as Govt. leaves royalty loophole wide open
By: Davina Bagot
(Kaieteur News) – When the new Shallow and Deepwater Production Sharing Agreements (PSAs) were drafted by the Government of Guyana (GoG), the intent was loudly advertised: Guyanese must finally receive a stronger share of the oil wealth being pumped from beneath their waters. But a fresh review of the recently published PSA for the shallow-water block awarded to a Total Energies–led consortium suggests that Guyana may once again be walking into a costly loophole, one that could allow oil companies to quietly claw back the very royalties the country is supposed to earn.
The agreement, signed on November 10, 2025 and released to the public on November 18, 2025, features what Minister of Natural Resources Vickram Bharrat touted as a tougher fiscal package: 10% royalty, 10% tax, and a 65% cap on monthly cost recovery. However, an analysis by this newspaper exposes a glaring omission that leaves royalty payments recoverable by the contractor once production begins. Section 3.3 of the Petroleum Agreement (PA) outlines costs not recoverable by the Contractor and makes no mention of royalties, payable to the GoG.
Flashback: Minister of Natural Resources Vickram Bharrat (2nd left sitting) ties the deal with Total Energies, QatarEnergy, and Petronas.Flashback: Minister of Natural Resources Vickram Bharrat ties the deal with Total Energies, QatarEnergy, and Petronas.
The following items have been explicitly flagged as non-recoverable: (a) cost incurred before the effective date; (b) Petroleum marketing; (c) Transportation costs of Petroleum beyond the Delivery Point; (d) Amounts paid under Article 28 of the Agreement, if any, and other amounts paid with regard to non-fulfilment of contractual obligations; (e) Costs of arbitration and the sole expert in respect of any dispute under the Agreement; (f) Fines and penalties imposed by law or the Courts of Law of the Cooperative Republic of Guyana; (g) Costs incurred as a result of wilful misconduct or gross negligence of the Contractor or failure to insure where insurance is required pursuant to Article 29.3 of the Agreement; (h) Payments made in accordance with Article 37.1 (Corporation Tax paid) and any associated penalties and interests imposed under the respective laws and by the Courts of Laws of the Co-operative Republic of Guyana; (i) Signature bonus; (j) Training fee payable under Article 33 of the Agreement; (k) Financial support for environmental and social projects payable under Article 44.7 of the Agreement; (I) Any charges, levies and taxes reimbursed by the Government.
Notably, Article 28, as noted above, speaks to financial guarantees while Article 37.1 relates to corporation taxes. Interestingly, the very next item under the contract (Article 37.2) addresses royalty, yet the PA did not explicitly include the payment as non-recoverable.
It must be noted that this blunder previously occurred with the PSA signed between the GoG and ExxonMobil in 2016 for the Stabroek Block. An addendum to the agreement was later made by the then David Granger-led administration to prevent the oil companies from recovering the 2% royalty paid to the state. The Addendum for which this newspaper has secured a copy, states that the parties engaged in discussions and “in the interest of the avoidance of all doubt, the parties have come to a mutual and satisfactory agreement that the payment of royalty pursuant to Article 15.6 of the Petroleum Agreement shall be borne solely by the Contractor.” It goes on to state that “the said royalty payment shall not be recoverable cost, in any manner or formulation under the Petroleum Agreement.”
Annex C of the PSA, specifically subsection 3.3 titled “Costs not recoverable under the agreement” was then modified and amended to also include: (h) payments of royalty by the contractor made in accordance with Article 15.6 of the agreement.
Total Energies, a French oil giant, in partnership with QatarEnergy, and Petronas of Malaysia was awarded a shallow water block by the GoG following its participation in the 2022-launched Oil Blocks Auction. Block S4 spans an area of approximately 1,788 square kilometres, located 50 to 100 kilometres off Guyana’s coast in water depths ranging between 30 and 100 metres. The French company leads the consortium with a 40% interest in the block, along with its partners, Qatar Energy and Petronas with 35% and 25% respectively. Total will commence exploration activity in the latter half of 2026. If commercial resources are discovered, the operator will move to production activities.
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