Latest update March 26th, 2026 12:30 AM
Guyana gave away US-billions from Liza One and Liza Two
…as Govt. settles for ‘small bone’
(Kaieteur News) – The Government of Guyana (GoG) has consistently refused to ring-fence the Stabroek Block projects, hindering the early flow of massive revenues into the country, in the hope of earning more in the future.
Instead of the measly 12.5% profit, Guyana could have already been enjoying its full 50% profits from the Liza One and Liza Two projects. With the reserve at the fields now running low, stakeholders are doubtful the country would ever see the promised 50% profit share from those projects.
Already, the operator of the block, ExxonMobil has produced about 500M barrels from the two projects which holds about one billion barrels in total.
With just about half of the total reserve for the two developments remaining, Guyana is poised to continue receiving the short end of the stick- 12.5% profits, instead of its full 50% profits.
Guyana lost
At an average oil price of US$75 per barrel, US$37.5B in oil has already been produced (500M barrels). The two projects carry a price tag of US$9.5B and an average production cost of US$25 per barrel. As such, if the US$12.5B production costs is also removed, US$15.5B in profits would have been available for splitting between the partners.
Further, using the 50/50 profit share model, Guyana could have already seen US$8B in revenue from Liza One and Liza Two alone, had a ring-fencing provision been activated, in addition to its 2% royalty of US$740M.
Instead, the country has earned about US$8.5B from oil produced at Liza One, Liza Two, Payara and Yellowtail.
This mechanism would have allowed the country to enjoy 50% of the profits, after the operator recovers costs.
Foregoing revenue
In October 2023, when Brent crude prices averaged US$91, Vice President Bharrat Jagdeo told reporters that by not ring-fencing the projects, government was ‘giving up a small bone for bigger bones in the future’.
He explained, “We admitted that we are foregoing revenue now in exchange for massive future income, because it’s going into new projects that will increase production and so even with the same share of the 50/50 plus the two percent royalty that the future income, because of the bigger scale will be massive in Guyana’s case and we are deliberately foregoing that in this period for that purpose and then trying to grab this bone now could cause you to lose all the bones, the bigger bones too in the future.”
With oil prices now hovering around US$60 per barrel and is likely to further decline, Guyana’s share of profits in the future will also reduce since the country would be receiving less for the sale of its oil.
The 2016 Production Sharing Agreement (PSA) with Exxon stipulates that 75% of oil produced monthly can be recovered by the operator to cover expenses. The remaining 25% is then shared equally between the Government of Guyana (GoG) and the oil company as profits, with the country receiving an additional 2% royalty.
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