Revisiting the Exxon Oil Contract: Why It Is Essential Now

Revisiting the Exxon Oil Contract: Why It Is Essential Now

The Production Sharing Agreement (PSA) that Guyana signed with ExxonMobil and its partners in 2016 was negotiated under dramatically different circumstances than what we face today. At the time, Guyana had no prior experience in oil production, the recoverable reserves were estimated at around 3 billion barrels, and the country was still in its infancy as an emerging oil nation. Today, Guyana has over 11 billion barrels of recoverable reserves, has become one of the fastest-growing economies in the world, and is producing more oil than many established producers. 

These are not incremental changes—they are fundamental transformations in the material conditions that justified the original contract.

Contracts are not static; they are fluid instruments that must evolve as time, circumstances, and conditionalities change. The 2016 PSA itself acknowledges this principle: Clause 32 explicitly allows for renegotiation if both parties agree, without setting limitations on when or why such renegotiation can occur. The clause was never intended to lock Guyana into unfair terms for 40 years while the country’s circumstances and the global energy market evolve around it.

Equally important, we must invoke the sovereignty clause and assert Guyana’s constitutional and international law rights over its natural patrimony.

Under international law, and enshrined in Guyana’s own constitutional framework, no foreign or local business can supersede the rights of the owners of the patrimony—which are the people of Guyana. The state retains the sovereign authority to enact, modify, or cancel laws governing natural resources in the national interest. The stability clause in Article 32.1 does not eliminate this right; it merely prevents unilateral changes without due process. It does not forbid mutual renegotiation, and it certainly does not prevent Guyana from asserting its sovereign prerogative to protect its people’s interests.

The current terms of the PSA return far too little to Guyana:

• Guyana receives only 12.5% of profit oil after Exxon recovers 75% of production for costs
• After royalties and taxes, Guyana’s effective share drops to roughly 14.5% of total profit oil
• Exxon pays no corporate income tax directly—the Guyanese government pays it on Exxon’s behalf
• The 2% royalty rate is among the lowest globally, while most oil-producing nations charge 12–20%
• No ring-fencing allows Exxon to claim costs from future projects against current revenue, delaying Guyana’s profit share indefinitely

In 2024 alone, Guyana paid over $260 billion GYD in tax liabilities on Exxon’s behalf—money that should have been Exxon’s responsibility. This is not a fair or sustainable arrangement for a country where poverty persists, and the minimum wage is being raised to $60,000/month.

Revisiting this contract is not only legally permissible—it is morally necessary. The “sanctity of contract” argument invoked by the current government masks a deeper reality: accepting 14.5% for depletable national resources while the private sector benefits from generous terms is the moral equivalent of stealing our sovereignty. Every year we delay, the inequity deepens, the legal entanglements grow harder to unwind, and the people of Guyana lose more of their rightful share.

The question is not whether we can revisit the Exxon contract—it is whether we will. The sovereignty clause, the changed conditions doctrine, and the explicit renegotiation provision in Clause 32 provide the legal foundation.

The moral imperative, the economic justice argument, and the constitutional duty to protect our patrimony provide the political and ethical justification. What remains is the collective will to act.

Guyana’s sovereignty is non-negotiable. The Essequibo belongs to Guyana—not by whim, but by right. And so does our oil. Revisiting the PSA is not anti-investment; it is pro-Guyana.

𝙏𝙝𝙚 592 𝙂𝙪𝙖𝙧𝙙𝙞𝙖𝙣 𝙞𝙨 𝙖𝙣 𝙞𝙣𝙙𝙚𝙥𝙚𝙣𝙙𝙚𝙣𝙩 𝙂𝙪𝙮𝙖𝙣𝙚𝙨𝙚 𝙘𝙤𝙢𝙢𝙚𝙣𝙩𝙖𝙧𝙮 𝙖𝙣𝙙 𝙤𝙥𝙞𝙣𝙞𝙤𝙣 𝙤𝙪𝙩𝙡𝙚𝙩 𝙘𝙤𝙫𝙚𝙧𝙞𝙣𝙜 𝙘𝙞𝙫𝙞𝙘, 𝙥𝙤𝙡𝙞𝙩𝙞𝙘𝙖𝙡, 𝙖𝙣𝙙 𝙧𝙚𝙜𝙞𝙤𝙣𝙖𝙡 𝙖𝙛𝙛𝙖𝙞𝙧𝙨.