Dear Editor,
Until the lion learns to write, every story will glorify the hunter. In other words, if the lion doesn’t get the chance to tell its side, the narrative will always favor the hunter. Allow me to share the lion’s side of the story as I respond to the March 22, 2025, editorial in Kaieteur News titled “Full 50% profit share.”
The editorial raises concerns about whether Guyana will ever truly realize its rightful share of oil revenues. However, while public scrutiny is both necessary and welcomed in managing Guyana’s natural resources, it is equally important that the discussion remains grounded in a clear and complete understanding of how the Production Sharing Agreement (PSA) operates.
First, let me be pellucidly clear: for every drop of oil sold, Guyana receives its 50% share of the profit oil, as stipulated in the agreement. This is, of course, after the 75% cost recovery is paid and the remaining profit oil is split evenly, 50% to Guyana and 50% to ExxonMobil and its partners. This arrangement is not theoretical or deferred; it is actively in effect. The claim that Guyana is not receiving its share of the profit can give a misguided understanding of how the system works.
Second, the issue of no ring-fencing, often cited as a disadvantage, must also be viewed through a more balanced lens. As the saying goes, you can’t have your cake and eat it too. While it is true that costs from new projects can be recovered against production from existing ones, this structure has enabled ExxonMobil to develop multiple projects simultaneously and at an accelerated pace. In practical terms, Guyana has moved from a single producing field to several major developments in just a few years, rapidly increasing daily production and, more importantly, national revenue. A ring-fenced system may have hindered this pace, delaying both production and earnings.
Another issue often overlooked in public discourse is investment risk. I am not saying that Guyanese should look at ExxonMobil as saviors. However, ExxonMobil has invested billions of dollars in offshore exploration and development in Guyana. These investments are made entirely at the company’s risk. If oil had not been discovered in commercial quantities, Guyana would bear no financial liability for those expenditures. In other words, while ExxonMobil recovers costs from successful production, it also absorbs the full burden of failed exploration, an important distinction in understanding the overall arrangement.
Editor, Guyana itself has not contributed capital to these projects beyond granting approvals and regulatory oversight. This means that from the outset, the country benefits from oil production without having to commit billions in upfront investment or assume the risks associated with uncertain exploration outcomes.
Certainly, factors such as oil prices, production levels, and ongoing investments will continue to influence the timing and scale of revenues. However, these are inherent features of the global petroleum industry, not unique distortions of Guyana’s agreement. Rather than framing the cost recovery system as a “trap,” it may be more constructive to recognize it as part of a broader framework that has enabled rapid sector growth and early revenue generation for the country.
We can go back and forth about whether Guyana got a fair deal or not, but as Guyana continues to evolve as a major oil-producing nation, the focus should remain on strengthening oversight, ensuring transparency, and maximizing long-term value for its people. Healthy debate is vital, but so too is clarity.
Sincerely,
Greg Lynch
