From 12.5% to nearly 40% – How long can the good times last? Part II of II (but see note)
Part I welcomed President Irfaan Ali’s announcement that Guyana’s entitlement from the Stabroek Block production has risen from 12.5% to approximately 39.8%. That percentage reflects mainly the recovery of accumulated exploration and development costs: as less production is required as cost oil, more becomes profit oil. The value of Guyana’s increased share has been magnified by rising production and oil prices, driven in part by geopolitical events including the Russian invasion of Ukraine and, more recently, the closure of the Strait of Hormuz. Meanwhile, much of the Stabroek Block remains unexplored.
The Stabroek Block remains a developing petroleum province, with further exploration and development bringing new recoverable expenditure. New discoveries are of course welcome, but the expenditure is ultimately recovered from production. If costs rise sufficiently, more oil will be required for cost recovery, reducing profit oil and Guyana’s share. The movement from 12.5% to nearly 40% should therefore not be regarded as permanent.
ExxonMobil’s claim of force majeure over acreage affected by Venezuela’s territorial claim adds another dimension. Any extension of the exploration period postpones relinquishment and potentially allows additional exploration and development expenditure to enter the cost-recovery pool. Government should disclose the acreage and obligations affected, the period of any extension and its consequences for relinquishment. Time and acreage in Stabroek have considerable value and cannot be treated simply as matters between the Government and ExxonMobil – still less as matters for ExxonMobil alone.
The other major variable is oil price. Guyana is enjoying both a much larger share of production and sharply higher prices following the war involving the United States, Israel and Iran. At the illustrative US$90 used in Part I, Guyana’s 41.8%, including the 2% royalty, is worth US$37.62 per barrel. At US$70 the same percentage produces US$29.26 and at US$60, US$25.08. At current production levels, the difference quickly runs into billions of US dollars. The percentage has not changed, but the value of what Guyana receives certainly has.
The Bank of Guyana’s figures put the revenue surge in perspective, though they do not establish the 39.8% share. For the first six months of 2026, petroleum receipts into the Natural Resource Fund were approximately G$378 billion, compared with G$224.7 billion for the same period in 2025 – a rise of about 68%. Profit-oil receipts rose by approximately 76%. These remarkable numbers reinforce the need for Government to publish the calculations and production data behind the announced 39.8%.
Peace in Ukraine and with Iran, whenever it comes, could remove a substantial part of the current price windfall. Equally, increased recoverable exploration and development expenditure could reduce Guyana’s percentage even if oil prices remain high. Guyana’s extraordinary fortune is that both variables are presently working in its favour: cost recovery has fallen substantially while oil prices have risen sharply. Neither can be assumed to continue indefinitely.
None of this results from any change in the 2016 Petroleum Agreement. The royalty remains 2%; profit oil continues to be divided equally; and the cost-recovery, tax and stabilisation provisions remain. What has changed is the economics of the Stabroek Block. Petroleum companies are entitled to returns commensurate with the risks they undertake, and exploration can undoubtedly result in enormous losses, but that argument carries considerably less weight today than it did in 2016.
The Stabroek Block today is a proven petroleum province with enormous resources already discovered multiple developments and exceptional production. Much of the early expenditure has been recovered, the risks have diminished considerably, yet the fiscal terms remain essentially those agreed in 2016. There is therefore no contradiction between welcoming Guyana’s greatly increased revenues and continuing to regard the Agreement as inequitable. A modest share of an enormously profitable enterprise can still produce a very large cheque; the size of the cheque does not establish the fairness of the bargain.
Part I demonstrated another aspect of that bargain. Even as Guyana’s profit-oil share rises, equal profit oil does not mean equal economic benefit because the contractors enjoy substantial tax advantages under the Agreement. The billions now flowing to Guyana are therefore evidence of the exceptional value of the Stabroek Block, not proof that the contractual division of that value was fair or reasonable.
Under pressure from the independent press, especially Kaieteur News, President Ali repeated the announcement earlier made by ExxonMobil Chairman Darren Woods. Having repeated the figure, he should substantiate it after confirmation from Woods and the Ministry of Natural Resources. Guyanese should be told whether the 39.8% includes the 2% royalty, the current balance of unrecovered cost, expected exploration and development expenditure, and the projections for cost oil and profit oil over the next several years. We should also know whether the 39.8% is expected to rise, remain broadly stable or decline as additional expenditure enters the accounts.
This is not information of merely commercial interest or reserved for specialists. Petroleum revenues are now central to the national finances and the percentage of production accruing to Guyana affects present revenues, future budgets and the resources available to succeeding generations. Parliament and the public therefore have a legitimate interest not merely in the headline percentage announced by ExxonMobil and repeated by the President, but in the figures, assumptions and projections behind it. Transparency requires more than announcing good news; it requires providing the information by which that news can be understood and independently assessed.
Guyanese are understandably frustrated by the obstinate refusal of President Ali and Vice President Jagdeo to entertain even the mildest suggestion that they invoke the renegotiation provisions of the 2016 Agreement, as they had promised to do. Having secured the electorate’s trust partly on that promise, they abandoned it on taking office. The hypocrisy is obvious, but it goes further: it is a betrayal of the electorate and – to use Jagdeo’s own words – a selling out of the national interest.
Note: The scale of the increase in oil revenues raises issues which go well beyond the 2016 Agreement. I have therefore decided to add a Part III – this coming Friday – examining the danger of this explosion in oil revenues becoming a licence for more waste, uncontrolled corruption and destructive economic management.