…says refusal to renegotiate, failure to manage deal responsible for country’s low earnings
(Kaieteur News) – ExxonMobil and its partners in the Stabroek Block recorded a staggering US$12.5B in profits last year while Guyana barely received US$2.5B, a reflection of not only government’s failure to renegotiate the lopsided 2016 agreement, but the administration’s inability to better manage the contract as promised.
This is according to chartered accountant and attorney, Christopher Ram. The advocate in an invited comment shared his opinion on the explanation provided by Minister of Natural Resources, Vickram Bharrat on the reason Guyana’s shares paled in comparison to the oil companies.
Chartered Accountant and Attorney, Christopher Ram
Bharrat told Kaieteur News that the Stabroek Block partners use a different accounting mechanism which includes depreciation, financing structures and taxes, whereas Guyana’s earnings are calculated using only profit oil and royalty payments.
For his part, Ram argued that, “Minister’s reliance on the “legacy agreement” argument is disingenuous and deflective, serving more to excuse the government’s inaction than to address the substantive concerns surrounding the 2016 Production Sharing Agreement.”
The lawyer reminded that the 2016 PSA was largely a resurrection of the 1999 Janet Jagan agreement framework, modified and expanded by the APNU+AFC administration.
Moreover, Ram pointed out that Bharrat is fully aware of the PPP’s promise to renegotiate the agreement and secure a better deal for the country as he was a prominent voice during the party’s 2020 elections campaign.
Consequently, Ram said, “He had the opportunity to act and did not. Today, instead of accountability, we are offered excuses.”
Additionally, the lawyer said the minister’s record on contract administration is equally troubling.
“After six years in office, his ministry has failed to bring a single cost recovery audit to completion. Rather than asserting the authority of the state, the government has allowed the oil companies to dominate the pace and terms of engagement, effectively running rings around the very ministry charged with regulating them,” Ram contended.
As such, he told Kaieteur News that the promised era of stronger oversight and tougher management of the sector has simply not materialised.
Instead, the lawyer noted that Bharrat’s statement suggests an acceptance of two of the most egregious features of the agreement.
He explained, “The minister seems not to know that under this agreement, the taxes he pays for the oil companies should come from Guyana’s share of profit oil. And that if the agreement is applied there is no money left in the Natural Resource Fund.”
Secondly, Ram highlighted that Guyana bears 50% of the decommissioning costs when the production wells run dry. He also emphasised that millions are being taken out of Guyana’s oil to pay for cleaning up the ocean floor years before the revenue is required; not only that, but the entire fund is held and controlled by the companies.
To this end, Ram argued, “The issue is not whether Guyanese understand the PSA. It is whether he does. And if he does, is doing nothing about it his chosen option?”
On Tuesday the Ministry of Natural Resources explained how the Stabroek Block partners recorded US2.5B in 2025, although the 2016 oil contract allocates a greater share of revenues to the country.
The fiscal terms mean that Guyana’s profits should exceed that of the partners, yet the three companies recorded five times the revenue that flowed into the country’s oil account in 2025.
Financial statements filed however revealed that Exxon recorded a staggering US$6B in profit before taxes, while its partners, Hess and CNOOC earned US$4B and US$2.5B respectively- some five times the US$2.5B that flowed into Guyana’s account that year.
Bharrat acknowledged the public concerns stemming from the profits reported by the companies and the petroleum revenues received by the state.
He explained, “Such comparisons must be understood within the legal and economic framework of the 2016 Stabroek Block Production Sharing Agreement.”
Bharrat stated that Guyana does not receive 50% of gross revenue, nor 50% of the companies’ accounting profits. Instead, the minister noted that under the PSA, the state first receives 2% royalty on petroleum produced and sold after which the contractor is then allowed to recover approved exploration, development and operating costs, up to 75% monthly. As such, Bharrat explained that the remaining balance, known as ‘profit oil’, is divided equally between Guyana and the contractor group.
“Therefore, where the full cost-recovery ceiling is applied, Guyana’s direct cash receipt is approximately 14.5 percent of gross revenue: 12.5% from its share of profit oil and 2% from royalty,” the minister said.
As such, Bharrat pointed to the reason Guyana’s profits only amounted to US$2.5B versus the companies’ US$12.5B. “Corporate profits are calculated under accounting rules and may reflect revenues, depreciation, financing structures, tax treatment and other corporate adjustments, whereas Guyana’s petroleum receipts represent the cash revenues due to the State under the PSA and deposited into the Natural Resource Fund,” according to the minister.