Guyana’s 39.8% Share: Temporary Gain, Lasting Questions

Guyana’s 39.8% Share: Temporary Gain, Lasting Questions

OPINION BY: Dr. Vincent Adams September 2026

There has been an array of public missives about the welcomed oil profit share to Guyana being more than tripled to 39.8%, or approximately G$8 Billion (B) per day at the current production rate and oil price. However, what seems to be missed is that this is unadulterated ring-fencing, proving that contrary to the Govt’s falsity, the contract does not disallow ring-fencing, as yours truly stressed in letter “Nothing in oil contract bars ring-fencing” published in the broad media including Kaieteur News (KN) June 14, 2025 edition.

 There should be no doubts whatsoever that Exxon notified President Ali of the increase before it made the news, and it goes without saying that any Leader would be jumping up and down shouting from the rooftops grabbing credit and scoring political points for such good news. However, beyond belief, it had to take weeks of public pressure to force Dr. Ali into doing the normal— and when he did, his uneasiness was most noticeable, when, instead of a gleeful announcement— he inexplicably first went on the defensive, taking great pains to lecture us on how the profit share formula works, and being emphatic that the contract was not changed to bring about the increase. What was this uncalled-for defensive posture about?

Ali’s strange behavior begs the question: was this just a shrewd business move by Exxon to boost its stock price and financial leverage which caught Ali by surprise, embarrassing and throwing him under the bus, since his Govt has been berating and making enemies of all and sundry who dare to advocate ring-fencing and —or renegotiations? Ask Glen Lall who made fierce fighting for ring-fencing and renegotiations his daily ritual to the nation.     

The ring-fencing and renegotiations question:

Most revealing was Dr. Ali’s disorienting answer to a question from Davina Bagot of KN about whether he will take this opportunity to renegotiate the contract to ensure the profit share remains at 39.8%. Amazingly not prepared for such an expectedly inevitable question, Ali resorted to confusingly speak from both sides of his mouth that he is having “internal discussions” and seeking expert advice how to “get greater benefits” while at the same time spouting his old song and dance of “sanctity of contract”.

First, despite what VP Jagdeo believes, Guyanese are not stupid, and know fully well that Exxon is the Govt’s only advisor and controller, so the “discussions” start and end how Exxon wants it. Second, how could the President still not comprehend that “greater benefits” beyond ring-fencing can only come with renegotiations which he and his Govt pledge not to do? Third, this is the same Ali and oil czar Jagdeo, who vow to never renegotiate because of “contract sanctity” and cowardly to even raise it with Exxon, though allowed for in Article 32 of the contract; and despite their manifesto promise and their rabid admonition that it is the worst contract ever, so, renegotiation will be of highest priority when in office. 

The President now finds himself in a bind knowing that this increase is temporary and would be a hard sell to the people; thus, to soften the blow of this bad news, he slickly comes up with fancy talk about “discussions with experts” for “path forward to get greater benefits”. Notwithstanding Exxon being his only expert and advisor, the President is still advised that there is nothing more to discuss nor think about, since the precedent for ring-fencing has now been set, whether or not motivated by Exxon’s financial interests, and must stay in place. Any drawing of a line at the end of any project is the definition of ring-fencing; so, there can be no going back!

Moreso, the President must demand that this new dispensation be retroactively dated back to the first ring-fencing point in 2022 when the first project (Liza 1) was truly paid off, along with recovery of the 39.8% worth of USD $B owed to the country since that time.

Costs do not add up:

Ring fencing means each project having its own independent cost bank (all monies charged to that project) and no use of revenues from any project to offset costs in another project. Despite the contract not barring ring-fencing, the Govt gives Exxon a free rein to mix-up all of the revenues and spending into one bucket or “cost bank” being filled with the daily running costs from every project including the USD $55 B costs announced on July 31, 2026, to have been paid off for the 1st 7 projects; but most conspicuously suspicious is that there is no mention that  the paid off cost bank also includes all costs running into USD $B for drilling exploration and appraisal wells and other costs for projects 8 & 9 already submitted to the Govt early this year for approval. 

It takes years of drilling exploration and appraisal wells and other activities such as preparing Environmental Impact Assessments (EIAs) before applying for Govt approvals. For example, the Liza 1 was discovered in 2015, but it took years of drilling before discovery and over one year afterwards to apply for permits. Similarly, since applications for permits for projects 8 & 9 were submitted early in 2026, there had to have been many USD $B charged to the cost bank at least starting in 2025 and before for those two projects.

The quandary facing the President and maybe why he has been so bashful, is that if there is no ring-fencing, how could there be a claim that the cost bank of USD $55 B was paid off for only the 1st 7 projects, when projects 8 & 9 have been also charging their costs to this same cost bank.

 It gets more confusing when the President and Minister Bharrat acclaim that the cost bank includes expenses for both capital (Capex) and operating (Opex) equivalent to the 75% cost oil; but something else kept quiet is that the 75% cost oil is not the maximum deducted recoverable costs, for all costs above the 75% are carried over into the next month, month after month, into the cost bank.

In any case, if the Opex is 20 barrels oil out of each 100 barrels according to the President, it means that the Capex accounts for the other 55 or 73.3% of the 75 barrels of cost oil or cost bank. Thence, the USD $55 B supposedly paid off for the 1st 7 projects will have been proportionally divided into USD $40 B for Capex and $15 B for Opex. However, the Field Development Plans (FDPs) which are the heart of the projects, document a total estimated Capex of USD $61 B.

With Exxon’s project management expertise, it is hard to digest that their estimated Capex could be a whopping 52% higher than the actual costs, unless the Guyana Govt happens to be managing their projects. This looks like something fishy going on here with the people’s money that must be explained. 

 Editors Note:

This opinion piece  raises significant questions about the recent announcement that Guyana’s share of petroleum revenues has risen to approximately 39.8%, reportedly equivalent to about GY $8 billion daily at prevailing production levels and oil prices. Its central contention is that the increase reflects, in practical effect, project-level ring-fencing—despite the Government’s longstanding position that the Stabroek Block Production Sharing Agreement does not permit it.

The writer argues that, once the recoverable costs of the first seven developments have been satisfied, revenue from those projects is no longer being used to recover costs associated with other developments.

The article identifies several issues requiring clear, documented answers from Government and the Stabroek Block contractors:

♦ Whether the 39.8% share results from a formal change in cost-recovery treatment, a project-specific accounting outcome, or a temporary condition caused by the timing of expenditures and production.

♦ Whether the announced approximately US $55 billion in recovered costs relates strictly to the first seven projects, and precisely what categories of expenditure it includes.

♦ Whether exploration, appraisal, engineering, environmental, pre-development, drilling, procurement, and other costs associated with proposed Projects 8 and 9 have been charged to the existing Stabroek Block cost bank.

♦ The present balance of unrecovered costs, broken down by project, activity, and month, including all expenditures carried forward because recoverable costs exceeded the 75% monthly cost-oil ceiling.

♦ Whether the stated cost bank contains both capital expenditure (Capex) and operating expenditure (Opex), and what amount is attributable to each category.

♦ How the reported US $55 billion recovered-cost figure compares with the capital-cost estimates contained in the approved Field Development Plans for the first seven projects.

♦ Whether Government intends to preserve the 39.8% share through a negotiated project-level ring-fencing arrangement, and whether it will seek a review under Article 32 of the petroleum agreement.

Under the Stabroek Block agreement, up to 75 % of petroleum produced in a month may be allocated to “cost oil,” subject to the agreement’s rules, while the remaining “profit oil” is shared equally between Guyana and the contractor group. Because Guyana also receives a  2% royalty calculated on gross production, the country’s effective share rises materially when recoverable costs fall below the maximum cost-oil allocation. The exact share therefore depends on actual production, realized oil prices, royalty treatment, recoverable costs, and any carried-forward cost balance.

The 39.8% figure should therefore be accompanied by  transparent public accounting. This should include the calculation methodology, the period to which it applies, the assumed production volumes and oil price, the cost-oil percentage actually claimed, the amount of unrecovered costs carried forward, and a project-by-project reconciliation of costs and revenues.

The issue is not merely technical. It goes to whether Guyana is receiving the maximum benefit from a finite national resource, whether the country’s petroleum accounting is sufficiently transparent, and whether the Government’s public explanations are consistent with the actual treatment of costs across the Stabroek Block.

For more on the agreement:   https://petroleum.gov.gy/wp-content/uploads/2024/10/Petroleum-Agreement-Oct-7-2016_2.pdf