A Bad Deal Admitted, but No Attempt to Fix It

592 GUARDIAN◊ACCOUNTABILITY◊INTEGRITY IN JOURNALISM◊GUYANA

A Bad Deal Admitted, but No Attempt to Fix It

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OPINION BY : Hem Kumar–September 2026

In his recent Al Jazeera interview, the President was asked directly whether he accepted that the agreement was a bad deal. His answer was unambiguous: “Yeah, we do. We never said it was a good deal.”

He went further. He acknowledged that ExxonMobil and its partners benefited more from the arrangement than Guyana. Yet, having made that admission, the President returned to the position his administration has maintained for years—that the agreement must be left alone because Guyana has an obligation to respect the sanctity of contracts.

That explanation is no longer sufficient.

There is a fundamental difference between recklessly tearing up a contract and responsibly seeking to improve one by mutual agreement. No serious person should urge Guyana to act arbitrarily, expose itself to avoidable litigation, or create uncertainty through unilateral action. But neither should a sovereign government, entrusted with safeguarding a nation’s patrimony, pretend that its only choices are to accept a bad agreement forever or destroy it altogether.

The real question is much narrower and much more reasonable: if the President accepts that the agreement is bad for Guyana, why has his government refused even to seek a voluntary renegotiation?

Contract Sanctity Is Not Inaction

The Government’s principal defense is that the PSA is binding and that any attempt to change it would damage Guyana’s credibility among investors.

Certainly, contracts matter. Investors must be able to rely on the rule of law, due process and the assurance that governments will not casually confiscate assets or discard obligations when political circumstances change. That is an important principle, especially for a young petroleum-producing nation that needs capital, technology and long-term partners.

But contract sanctity cannot reasonably mean that Guyana must surrender its right to negotiate.

A contract can be binding while still being amendable. Commercial agreements are routinely revised by mutual consent when circumstances change, when the parties’ bargaining positions evolve, when risks have been reduced, or when both sides see advantage in a new arrangement. Indeed, the reported amendment clause in the PSA provides a legal pathway for the parties to vary its terms with written agreement.

That is not a breach. It is not expropriation. It is not repudiation. It is not cancellation. It is negotiation.

If Guyana approached ExxonMobil with a proposal to revise selected provisions of the PSA, ExxonMobil would retain the right to accept, reject or counter-propose. If the company refused, the existing contract would remain in force. Guyana would not have violated the agreement merely by asking its partner to consider fairer terms.

This is the crucial point the Government continues to evade.

The President’s repeated invocation of investor confidence answers a question that has not been asked. The argument may be relevant if the Government proposed to unilaterally rewrite the agreement or stop production in disregard of its obligations. But Guyanese are asking whether the Government has made a serious, good-faith effort to secure voluntary improvements in an agreement it now openly acknowledges is lopsided. There is no contradiction between respecting a contract and seeking the consent of the other parties to amend it.

In fact, a government that does not explore lawful remedies for an admittedly unfavorable national agreement risks failing in its duty to the people.

An Admission With Consequences

The President’s latest statement is not merely a rhetorical concession. It has consequences. When the Head of State says that Guyana’s most consequential petroleum agreement is a bad deal, he is acknowledging that the country may be receiving less value from its oil resources than it could have secured under a more balanced arrangement.

For years, the public has been told that Guyana inherited the PSA and must therefore honor it. That is true as far as it goes. The agreement was signed in 2016 under the previous APNU+AFC administration, and the PPP-C inherited it after returning to office in 2020. But inheritance does not extinguish responsibility.

The PPP-C did not come to office as a powerless observer. It came with a manifesto, a parliamentary majority, constitutional authority, control over petroleum policy and a public mandate to improve the management of Guyana’s resources. It cannot simultaneously claim credit for the oil-funded transformation now taking place while disclaiming responsibility for pursuing better terms under the contract that governs the country’s most important source of revenue.

If the agreement is bad, then the Government should explain what options it examined to improve it.

◊ Did it obtain independent legal advice on the amendment provisions?

◊ Did it commission an economic assessment of the benefits of negotiating improved fiscal terms?

◊ Did it ask ExxonMobil to consider changes to royalties, cost recovery, ring-fencing, tax treatment, local-content obligations, disclosure requirements or environmental protections?

◊ Did it assess whether changed circumstances—including enormous discoveries, proven commercial success, reduced geological risk and major capital recovery—strengthened Guyana’s case for a rebalanced relationship?

If the answer is no, then the Government has not exhausted the reasonable options available to it.

If the answer is yes, then the public deserves to know what was proposed, what was rejected and why.

Guyana’s Bargaining Position Has Changed

The 2016 PSA was signed before the full scale of Guyana’s petroleum potential had been established. At the time, the country was an emerging frontier province. The commercial viability of the resource was still developing. Investors faced geological uncertainty, infrastructure challenges and the risk that large discoveries might not lead to profitable production. Those circumstances no longer exist.

Guyana is now a major oil producer. ExxonMobil and its partners have made a succession of world-class discoveries. Production has expanded rapidly. The Stabroek Block is no longer defined by speculative exploration risk; it is defined by proven reserves, producing fields, established infrastructure and enormous revenue flows. That transformation matters.

The original rationale for generous fiscal terms is often that high-risk exploration requires powerful incentives. But when the risk has been substantially reduced, the investment recovered and production established, a government has every reason to examine whether the relationship remains equitable.

No one is suggesting that Guyana should deny ExxonMobil a return on its investment. The company took risks, deployed capital, brought technical expertise and built the production system that transformed Guyana into an oil-producing State. It is entitled to profit.

A partnership should not become permanently immune from review simply because one side entered early.

The Cost-Recovery Question

The petroleum agreement cannot be assessed only by looking at the amount of money Guyana receives after it reaches the Natural Resource Fund.

That is where the public debate has often become confused.

The Natural Resource Fund is important. It records the revenue received by the State and provides a framework for withdrawals through the budgetary process. Parliamentary approval, public appropriations and audit oversight are all necessary components of fiscal accountability.

But the NRF is the end of a chain, not the beginning.

Before Guyana receives its share, petroleum is produced, sold, measured and valued. Royalty is calculated. Costs are claimed by the contractor. Expenditure is recovered. Profit oil is determined. Then the respective shares of the Government and the oil companies are allocated. That means transparency cannot be confined to the question of how money is spent after it enters the Fund.

Guyanese must also be able to determine whether the country received the correct amount in the first place.

What costs were claimed? Which were accepted? Which were challenged? Which remain disputed? What is the basis for classifying particular expenditure as recoverable? What information is available on petroleum lifting and Government oil sales? How are production volumes verified? How can the public assess whether the cost-recovery mechanism is operating in Guyana’s best interest?

These are not academic questions. They go to the heart of the petroleum bargain.

Where the contractor is permitted to recover large volumes of expenditure before profit oil is divided, the integrity of cost verification becomes indispensable. A weak, delayed or opaque audit process can mean that the public has no clear view of whether expenditures have been properly reviewed before they affect the revenue available to the country. The Government may say that the NRF is transparent. But it cannot use the existence of the Fund to avoid questions about the calculation, verification and management of the revenues deposited into it.

Transparency in spending is essential. Transparency in earning is equally essential.

Oil Wealth Must Be Felt

President Ali has defended his government’s record by pointing to housing, roads, schools, health facilities, lower mortgage rates, infrastructure projects and rising household asset ownership. There is no doubt that Guyana is changing. New roads are being built. Housing schemes are expanding. Major public works are underway. The State has more financial capacity than at any point in the country’s history.

But visible construction is not, by itself, proof that oil wealth is being fairly shared.

The true test of petroleum development is whether ordinary Guyanese experience sustained improvements in their quality of life.

Can families afford food, rent, land, electricity, transportation and education? Are wages keeping pace with the cost of living? Are young people gaining stable, skilled and well-paid employment? Are small businesses able to compete and expand? Are hinterland and rural communities receiving comparable improvements in services and opportunity? Are the benefits reaching workers and vulnerable households, or mainly contractors, politically connected interests and those already positioned to capture large projects?

That is why the Government must publish more than broad claims of transformation. It should provide regular, accessible and independently verifiable data on real wages, employment quality, poverty, food prices, housing affordability, land distribution, household debt, regional investment and the local ownership of economic opportunities generated by oil.

Guyanese are entitled to measure not only the size of the oil economy, but the fairness of its distribution.

 Transparency Cannot Be Selective

The President dismissed claims of opacity by arguing that all oil revenues enter the NRF, are withdrawn through the national budget and are audited by the Auditor General.

That response addresses one part of the accountability question. It does not answer all of it.

There must be transparency in the Natural Resource Fund. There must also be transparency in the Ministry of Natural Resources, the Guyana Revenue Authority, the Guyana Geology and Mines Commission, the Environmental Protection Agency, the petroleum licensing process, local-content administration and every major decision affecting the State’s oil wealth.

The public should not have to depend on occasional media reports, leaks, scattered statements or parliamentary exchanges to understand the country’s largest industry.

The Government should routinely disclose:

◊ Production volumes by project and by period.

◊  Petroleum revenue received by the State and the methodology used to calculate it.

◊ Government crude liftings, sales, buyers, prices and associated costs.

◊ Cost-recovery claims and the status of audits.

◊ Recoverable expenditure accepted, rejected and still disputed.

◊ Environmental permits, monitoring reports, incidents and enforcement action.

◊ Local-content performance, including the identity and ownership of beneficiary companies where lawful and appropriate.

◊ Major policy decisions, technical studies and legal advice that can be disclosed without undermining Guyana’s legitimate interests.

The Low-Carbon Test

The President has also argued that oil income is needed to finance Guyana’s adaptation to climate change—sea defenses, drainage, irrigation, flood management, resilient infrastructure and broader economic diversification. That argument has force.

Guyana is one of the countries most exposed to rising sea levels, flooding and climate-related threats. It must invest heavily in protecting its coastland, agriculture, communities and public infrastructure. Petroleum revenue can provide resources for those urgent needs.

Guyana cannot credibly speak only of forests, biodiversity and environmental services while declining to fully confront the climate consequences of becoming one of the world’s fastest-growing oil producers. Nor can it claim a clean-energy transition without clear evidence that the domestic energy system is genuinely moving away from polluting fuels and toward dependable renewable alternatives.

The question is not whether Guyana should use oil revenue for development. The question is whether that revenue is being used to build a future that is less dependent on oil, more resilient to climate risks and capable of supporting citizens when petroleum production eventually declines.

A serious diversification strategy requires more than slogans. It requires measurable investment in agriculture, manufacturing, technology, education, tourism, renewable energy, environmental services, small business development and human capital.

Oil must be the means, not the national destiny.

The Government Must Choose

President Ali cannot have it both ways.

He cannot acknowledge that the PSA is a bad deal for Guyana, concede that ExxonMobil received the better hand, and then insist that there is no reason even to explore lawful, voluntary mechanisms to improve the country’s position.

Neither can the Government answer every demand for petroleum accountability by pointing only to the Natural Resource Fund. The public has a right to know not only how revenues are spent, but how they are calculated, how costs are verified, how oil is sold, how decisions are made and whether Guyana is receiving its full entitlement.The issue is not whether Guyana should dishonor its obligations. It should not.

A government that truly believes the deal is bad has a duty to do more than repeat that it inherited it. It must show that it has tested every legitimate avenue for improvement, demanded the highest level of transparency, strengthened independent oversight and ensured that the wealth beneath Guyana’s waters produces lasting benefits above them.

That is not hostility to investment.That is responsible government.

– The Board