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Ring-fencing
(Kaieteur News) – The latest revelation by the Oil and Gas Governance Network (OGGN) revealed that this country could have earned approximately US$ 7.7B. The difference, roughly US$4B—was not lost because the oil was never produced. It was lost because Guyana continues to operate under a Production Sharing Agreement that lacks one of the most basic safeguards in petroleum contracts: ring-fencing.
For years, Kaieteur News has warned that the absence of ring-fencing would rob Guyanese of billions. Those warnings were dismissed as alarmist. Today, the figures speak louder than any editorial ever could.
Ring-fencing is not some radical invention. It is standard petroleum practice across the world. It simply requires that each oil development pays for its own costs before profits from that project are shared. Without it, ExxonMobil and its partners are permitted to use revenues from producing projects such as Liza One, Liza Two, Payara and Prosperity to finance newer developments like Uaru and Whiptail. Guyana therefore keeps paying yesterday’s bills, today’s bills and tomorrow’s bills all at the same time while waiting for its rightful share of profits.
The absurdity of this arrangement has been exposed before. In 2023, ExxonMobil itself acknowledged that the original investment for the Liza Phase One project had effectively been recovered. Under any sensible fiscal regime with ring-fencing, Guyana should then have begun receiving half of the profits from that project. Instead, because every new development is thrown into one giant cost-recovery bank, the country remains trapped at a meagre 12.5 percent profit share while fresh expenses continue to dilute its earnings.
What makes this situation even more troubling is that Guyanese were promised better.
When in opposition, today’s leaders fiercely condemned the absence of ring-fencing. They accused the previous administration of surrendering Guyana’s interests and pledged that the country’s oil contract would be fixed. Once in office, however, those promises evaporated. The same officials who once declared Guyana had been “sold out” now defend the very arrangement they previously condemned. Even after acknowledging that ring-fencing would increase Guyana’s profits immediately, the government has chosen not to pursue it.
The consequences are staggering. Four billion US dollars is not loose change. It is more than half of Guyana’s public debt at the end of 2025. It could have transformed healthcare, modernised schools, strengthened sea defences, upgraded hinterland infrastructure and significantly reduced the country’s dependence on borrowing. Instead, Guyanese are told to celebrate rising oil production while their share of the wealth remains artificially suppressed.
This is the great illusion of Guyana’s oil boom. Production continues to shatter records, yet the country is prevented from fully enjoying the fruits of that success because the cost recovery machine never stops turning. Every new project extends the queue before Guyana reaches the front of the line. More oil does not automatically mean more money when the contract allows new developments to consume revenues from existing ones.
The OGGN has once again urged the government to implement ring-fencing, strengthen real-time auditing and closely monitor cost recovery before the nation’s oil wealth slips further away. Those recommendations deserve immediate attention, not political excuses.
Oil is a wasting asset. Every barrel exported is one that can never be recovered. Every year that passes under an unfair fiscal arrangement represents billions permanently surrendered. Future generations will not judge today’s leaders by the number of barrels pumped or the number of floating production vessels commissioned. They will ask a far simpler question: when Guyana finally struck oil, who protected the nation’s wealth and who stood by while billions slipped away?
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