Dear Editor,
Recent commentary has suggested that because Guyana is producing more oil and earning significant revenues, the outstanding costs associated with the Stabroek Block should already have been fully recovered. From there, the argument is made that Guyana should now receive 50 percent of all oil revenues.
I understand why this sounds convincing. However, gross revenue, recoverable costs and profit oil are not the same thing.
Under the current production-sharing arrangement, up to 75 percent of oil production can be used to recover eligible costs. The remaining portion is profit oil, which is shared equally between Guyana and the contractor group. Guyana also receives a two percent royalty. Therefore, Guyana receives half of the profit oil—not half of total revenue before costs are accounted for.
It is also important to recognize that cost recovery is not necessarily a single bill that only declines. Existing offshore operations require ongoing expenditure, while new developments require wells, subsea infrastructure, production vessels, and other major investments before oil production begins. Approved operating and development costs can therefore be added even as earlier costs are recovered.
This does not mean citizens should accept every figure without question. Guyanese have every right to know how much remains to be recovered, what new costs have been added, and whether those expenses were independently verified. Updated information would help the public understand whether the cost bank is declining and how Guyana’s share may change as production expands.
However, simply taking the consortium’s total revenue and dividing it in half does not reflect how the agreement works.
The real questions are whether all claimed costs are legitimate, whether they have been properly audited, and whether Guyana is receiving every dollar due under the contract. Those questions deserve clear answers from both the government and industry.
Public scrutiny is necessary, but it is most useful when based on a complete understanding of the fiscal arrangement. Guyana needs transparency, not calculations that confuse total revenue with profit oil and risk creating expectations that the contract itself does not support.
Yours faithfully,
Greg Lynch
