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Borrowing on oil
(Kaieteur News) – Guyana stands at a historic crossroads, yet its oil wealth is being shadowed by rising debt and questionable fiscal choices that continue to define its petroleum era. With offshore production in the Stabroek Block generating an estimated US$18 billion in 2025 alone, the country should, by all logic, be cash-rich.
Instead, it is increasingly reliant on borrowing, including a US$527 million loan from the US EXIM Bank for the Gas-to-Energy project, an initiative repeatedly framed as “transformational” but financed with debt rather than oil revenue support.
At the same time, Government waived approximately US$525 million in corporate taxes for ExxonMobil in the same period, effectively surrendering revenue that could have significantly reduced or eliminated the need for external financing. The contradiction is glaring: oil wealth is flowing out through contract terms while debt is flowing in through international lenders.
Under the 2016 Production Sharing Agreement, the structure heavily favours cost recovery. Up to 75% of production is first used to reimburse Exxon and its partners for investment, leaving only 25% as profit oil. That profit is then split 50/50, with Guyana receiving a relatively small share compared to global norms. Even then, the State must indirectly absorb the tax obligations of the contractor through mechanisms embedded in the contract itself. This arrangement, repeatedly criticised in Kaieteur News analyses and public commentary, has long been described as a “giveaway” framework that limits national retention of oil wealth.
The numbers tell a stark story. Of the US$18 billion generated in 2025, approximately US$13.5 billion was absorbed through cost recovery, leaving about US$4.5 billion in profit oil. Guyana’s share, including royalty, amounts to roughly US$2.3 billion, significant on paper, but dwarfed by the scale of production and the country’s development needs. Meanwhile, debt obligations continue to mount, with national borrowing reaching US$7.7 billion and projected toward US$10 billion in the near term.
What makes this trajectory more troubling is not only the structure of the contract, but the political narrative surrounding it. As Opposition Leader, Bharrat Jagdeo was among the most vocal critics of the 2016 agreement, describing it as a betrayal of national interest and promising renegotiation or improved contract administration once in office. Those commitments were even embedded in the PPP’s 2020 election manifesto, which spoke of correcting imbalances in the oil deal.
Yet, once in government, the rhetoric shifted. Renegotiation of the Stabroek Block contract was effectively ruled out, justified by stabilisation clauses and investor confidence arguments. As reported previously, Jagdeo has maintained that unilateral changes are not feasible and would trigger arbitration or compensation obligations under the agreement. This reversal has left critics questioning whether political promises were ever realistically intended to be fulfilled or simply deployed as electoral messaging.
The result is a paradoxical economic model: Guyana borrows billions on international markets while simultaneously granting tax waivers to one of the world’s most profitable oil operations within its jurisdiction. The Gas-to-Energy project, financed through external debt, is itself tied indirectly to Exxon infrastructure and arrangements that further entrench repayment obligations stretching decades into the future. Kaieteur News has consistently highlighted the broader concern that Guyana is experiencing resource wealth without resource control. While government officials often point to infrastructure expansion, roads, and energy projects as evidence of progress, the financing structure behind these developments tells a more complicated story. Much of the “development” is being underwritten by loans rather than retained oil revenue, meaning future generations will inherit both infrastructure and debt servicing burdens.
This raises a fundamental question: if Guyana is already producing billions in oil annually, why must it borrow to fund projects that are directly linked to its petroleum sector? The answer lies in the architecture of the PSA, which prioritises investor recovery over national accumulation. The more oil is produced, the more costs are recovered by the operator before the State sees meaningful gains.
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