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Guyana paid off Exxon for 7 oil projects but still to receive full 50% profits agreed to in contract
(Kaieteur News) – Guyana has paid off ExxonMobil the full cost of seven oil projects approved to date by the Government of Guyana (GoG), yet, the country is still to begin receiving its full 50% profits in accordance with the 2016 Production Sharing Agreement (PSA).
At its press conference earlier this month, Exxon’s Vice President and Business Services Manager, John Colling informed the media that US$4.5B was sitting in the cost bank to be repaid by Guyana up to the end of 2025.
“Through the end of 2025, there was over US$55B in the cost bank of which US$51B had been recovered. As I mentioned in my prior talking points, US$4.5B was yet to be recovered by ExxonMobil Guyana Limited and its co-venturers,” Colling explained.
He added that the higher price of oil has resulted in a desaturation of the cost bank which means that recovery of investments could occur sooner than originally anticipated which could “likely be this year”.
Using an average oil price of US$80 per barrel, considering daily production for the year so far at approximately 900,000 barrels per day (bpd), the Stabroek Block generated approximately US$12.3B in revenue up to June 20, 2026.
According to the oil deal, 75% of revenue is dedicated to cost, as such, it could be estimated that US$9.2B went towards cost, far more than the US$4.5B that needed to be recovered according to Exxon.
This means that Guyana should already be receiving its full 50% profits outlined in the PSA as the cost of all seven oil projects sanctioned by the GoG has been repaid.
Currently, four projects are producing oil in the Stabroek Block. Three are under development and are likely to come on stream between 2026 and 2029.
Ring-fencing
In the meantime, Exxon has applied to the government for its eighth and ninth projects that remain under consideration. Should a new licence be granted without a ring-fencing provision, Guyana would be further delaying its opportunity to receive its fair share of profits.
A ring-fencing provision would prevent ExxonMobil from using revenue generated at the projects currently producing oil to pay for developments that are yet to come on stream. In this manner, Guyana would be entitled to 50% of all revenue generated, after costs are deducted for maintenance and operation activities.
As such, all investment into additional projects will be repaid when that development starts producing oil.
Govt. silence
With ExxonMobil presenting information to the public that it finds “appropriate” the GoG has been equally selective with the information it discloses to the public regarding the offshore operations.
The GoG previously promised a public statement on the cost bank and “how it will operate moving forward.”
In May, the Minister of Natural Resources, Vickram Bharrat said, “No new project is added because there is no approval and you would have heard from several persons that we are coming to a desaturation point…so we’ll be able to maybe hold a press conference or the president might say something publicly on that issue on the desaturation of the cost bank and how it will operate moving forward.”
Minister of Natural Resources, Vickram Bharrat
Regarding increased revenue flow for Guyana, he noted that although no other project cost has been added to the cost bank, other expenses relating to exploration is still being incurred.
“On your question about 50/50, remember there is still some amount of expenses being incurred in terms of exploration activities in the Stabroek Block. Now they still have a year more on that exploration licence, so those are costs that will still be accumulated too. That’s why we say we didn’t pay off the cost bank, but it’s being desaturated so we will now have to look at the numbers and look at the work ongoing in the block to see at what point in time we will get to that 50/50 profit sharing of oil,” Bharrat explained.
In March this year, president of ExxonMobil Guyana Limited (EMGL), Alistair Routledge revealed that Guyana was likely to pay off the cost bank by the end of 2026 due to the higher oil prices.
President of ExxonMobil Guyana, Alistair Routledge
“If you stay at the current oil price then it will happen this year based on the level of expenditures and the production that we anticipate so that’s a significant acceleration. What that then means is that instead roughly the 14 and a half per cent that the country has been receiving by way of revenues into the Natural Resource Fund from the Stabroek production and revenues, what will happen is that percentage will significantly increase,” Routledge told reporters.
Following the recovery of all costs, Article 11.4 provides “The balance of crude oil…shall be shared between the government and the contractor for each field in the following proportions: Contractor fifty per cent (50%) and minister fifty per cent (50%).”
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A question with the new contract, would we have to continue paying Exxon taxes,or would it be split 50/50Abd would the ring fencing be implemented and agreed upon????????