Lack of ring-fencing robbed Guyana US$4B - OGGN

Lack of ring-fencing robbed Guyana US$4B – OGGN

Aug 04, 2026 News

(Kaieteur News) – Since Guyana began earning from its petroleum sector in 2020 to December 2025, the country amassed US$7.7 billion in revenue, a mere fraction of what it could have earned through the implementation of a ring-fencing provision.

The Oil and Gas Governance Network (OGGN) in a letter to Kaieteur News on Monday highlighted that Guyana could have earned US$12.4 billion from its oil wealth in the Stabroek Block had government implemented a ring-fencing provision to prevent ExxonMobil from utilising the revenue generated there to pay for its other projects.

Ring-fencing means revenue generated at one project should pay for itself rather than fund additional developments. This would increase Guyana’s profit share after the cost for each development is recovered by the oil companies.

The first four projects, Liza One, Liza Two, Payara and Prosperity are currently producing about 915,000 barrels per day (bpd). OGGN explained these projects carry a collective price tag of about US$28.5B.

It said, “During the period 2020 to 2025, the total number of barrels of oil sold was 796.5 million barrels; but to cover the investment cost, only 566.5 million barrels of oil were required to be sold to repay the capital cost and the operating cost.”

OGGN pointed out that based on the 2016 Production Sharing Agreement (PSA), 75% of the total revenue earned must be captured as cost, with the remaining 25% split in half, yielding 12.5% of total revenue as profit share for Guyana. The group therefore explained, “Since total revenue earned between 2020 and 2025 is US$61.3 Billion, therefore 75 percent cost recovery is US$46.0 billion and Guyana profit share of 12.5 % of total Revenue is US$7.7 billion.”

Had a ring-fencing provision been applied to the earnings between the period 2020 and 2025, the entire cost of the first four projects would have been repaid and Guyana could have been collecting 50% of the profits generated in the Stabroek block. OGGN noted that the operating cost would still apply but this would nonetheless significantly increase Guyana’s share of profits.

The group explained, “Undoubtedly, ring-fencing will make a significant difference for Guyana as soon as the investment cost is repaid. However, if no ring-fencing continues, and as new projects come on stream without ring-fencing (for example, Uaru and Whiptail are new projects), it will give the understanding that output and profits will be increasing, and Guyana should be joyful; however, since the 75-cost recovery mechanism will still be operable, profits will be significantly understated.”

OGGN therefore urged Guyanese politicians to take action before “the oil is done” calling for improved management and oversight by including ring-fencing, real-time auditing, and monitoring the breakeven quantity of oil sold.

Furthermore, the group stated, “It is also indisputably obvious that the current arrangements and earnings obtained from the oil extraction operation is way below what it should be for Guyana. And if no corrections are made, we already know what future generations will say about us. They will say: Our ancestors were taken to the cleaners.”

Notably, a US$4B in revenue loss for the country amounts to more than half of the country’s total debt it ended the year with in 2025. According to government, Guyana’s debt at the end of the year was a whopping US$7.7B. This year, it is expected to surpass US$10B.

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ExxonMobil, OGGN, profit, ring-fencing

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