Glenn Lall has hit the nail on the head

Apr 27, 2026 Features / Columnists, Peeping Tom

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(Kaieteur News) – For the average Guyanese, the promise of oil was simple entailed  a better life. It involved more jobs, improved roads, better education and health care and a future where the country finally earns what it truly deserves. But five plus years into oil production, there is a growing feeling that Guyana has been shortchanged, first before the contract was signed, and now even after production has begun.

One of the most persistent voices raising this concern has been Glenn Lall, the publisher of this newspaper. He has repeatedly argued that a key weakness in Guyana’s oil agreement with ExxonMobil and its partners is the absence of what is called “ring fencing.” While that may sound technical, the idea is actually quite simple.

Ring fencing means that each oil project or field stands on its own financially. In other words, the costs of developing a new oil field cannot be deducted from the profits of an already producing field. Without ring fencing, oil companies can keep subtracting new expenses from current earnings. This reduces the profit that Guyana receives, even when oil is already flowing and being sold at high prices.

This is where the problem lies.

Guyana is currently receiving about 14.5% of oil revenues when all factors are considered. Many believe this is far too low, especially for a country that owns the resource. If proper ringfencing provisions had been included in the Petroleum Sharing Agreement, Guyana’s share today could have been significantly higher.

In fact, there is a strong argument that the country should already be close to a 50-50 split in revenues from some oil fields. Why? Because the initial capital costs—the billions spent to explore and develop certain fields—are already being paid off through cost recovery. Once those costs are recovered, the country should logically begin to receive a much larger share of the profits.

But that is not what is happening.

Instead, because new oil fields are constantly being developed, the oil companies are able to charge those new costs against the revenues from existing production. This means Guyana continues to pay for future developments, even while current fields are producing large volumes of oil. Simply put, the country is always stuck in a cycle of paying back costs.

This is exactly what ring fencing would have prevented.

Critics like Glenn Lall argue, quite persuasively, that this arrangement benefits the oil companies far more than it benefits Guyana. The companies take on the upfront investment, yes, but they are guaranteed recovery of every cent they spend. That means they are not truly taking financial risks in the way many people assume. Their investments are recoverable and are being repaid now, from Guyana’s share of the oil.

So, while oil production is booming, Guyana’s earnings remain limited.

There are those who defend the current arrangement. They say Guyana may receive less money now, but over time the country will benefit more as costs are recovered and production continues. But this argument raises an important contradiction.

There is also an unwritten policy which is often discussed in economic circles. That policy argue that resource-rich countries should maximize their earnings while the resource is available. Oil is not endless. Prices fluctuate. Global demand may change. So why delay benefits that could be secured now?

Imagine if Guyana were receiving a 50% share of oil revenues today, with oil prices hovering above US$100 per barrel. The country would have far greater resources to invest in infrastructure, education, healthcare, and economic diversification. That kind of income could transform lives in a single generation.

Instead, much of that potential wealth is being deferred.

The reality is that the absence of ring fencing continues to cost Guyana. And while the government may recognize the logic behind fixing this issue, it faces a difficult challenge. ExxonMobil and its partners are powerful multinational corporations with significant leverage. Renegotiating or tightening terms is not easy. But difficulty does not mean impossibility.

At its core, this debate is about fairness. Guyana owns the oil. Its people are the rightful beneficiaries. The country should not be in a position where it is continuously paying for new developments while receiving a relatively small share of the profits from existing production.

The argument being made by Glenn Lall and others is straightforward: take what we deserve now. Use it to build the future. Do not allow the bulk of the benefits to remain with the oil companies while Guyana waits.

Because in the end, oil wealth is only meaningful if it truly improves the lives of the people who own it, and the sooner the better.

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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• ExxonMobil, ExxonMobil Guyana, Glenn Lall, Guyana Oil, Peeping Tom, ring-fencing

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