President Ali’s Al Jazeera interview

It is the third variable in his calculation (a government share of 40%) that may be most off the mark if, as is likely the case, revenue is shared between the Guyana government and the oil consortium based on the model agreement posted on the GGMC website. The terms to determine how production/revenues are split or shared are contained in an agreement known as a Production Sharing Agreement (PSA). The model PSA on the GGMC website covers the three main elements in the calculation. First, there is a cost recovery element. The model agreement stipulates that the oil company can keep up to 75% of oil production (referred to as cost-oil) to recoup the cost of its investment on exploration, development and production. After the company has taken off this production, the second element in a PSA, called production sharing, comes into play. Production sharing in our model PSA divides the remaining 25% of production (referred to as profit-oil) between government and company 50/50. Therefore, the government take is more likely to be around the 12.5% mark rather than Ramkarran’s 40%. From Liza’s projected daily production of 100,000 barrels, the government daily take will therefore be 12,500 barrels. Multiply that by whatever is the prevailing world oil price and you arrive (as a first approximation) at how much revenue the government can expect. ... As currently advertised, Guyana’s model PSA is considered highly attractive not only because of the nice elements it contains (75% cost recovery, 50/50 production sharing, low royalty and taxation) but because of the elements it does not include compared to typical PSAs worldwide. Excluded are such elements as sliding scales (to determine, for example royalty rates and production sharing), production bonuses (recurring payments to government by the company when cumulative production reaches set levels) and signature bonuses (a one-off payment to government on signing of a contract). Indeed, Minister Trotman did indicate in an interview with an online oil industry journal that he favoured the expansion of our PSA to include some of these terms. It should be noted that the government can sign different PSAs with different companies and even for different oil fields with the same company. The practice worldwide is for a government to demand a bigger cut in succeeding PSAs as it gains experience and clout. ... In June this year, a new PSA was reportedly signed between the government and the consortium led by ExxonMobil. The actual terms of the PSA remain to be seen. But chances are they will follow closely that of the agreement displayed on the GGMC website. The country will still earn a game-changing several hundreds of millions of dollars from the oil discovered so far. But I doubt whether the Liza field alone will be a yearly multi-billion dollar earner for the government. In this largely underexplored basin, revenues will approach Ramkarran’s estimate as more oil is discovered as it surely will.

5th FPSO to arrive in Guyana this week, set to push oil output past 1M bpd – Pres Ali - Guyana Times # 5th FPSO to arrive in Guyana this week, set to push oil output past 1M bpd – Pres Ali August 19, 2026 #### The country’s fifth floating, production, storage and offloading vessel, the Errea Wittu, is expected to arrive in Guyana this week and will push the country’s oil production beyond one million barrels per day by year-end. This was announced on Tuesday by President Dr Irfaan Ali during a press conference at the Office of the President. “Our fifth production vessel set sail from Singapore in early August 2026 and is expected to arrive off Guyana’s coast this week, with first oil targeted for the fourth quarter of 2026,” he noted. The Errea Wittu is assigned to the Uaru development project in the Stabroek Block. Built by MODEC at a cost of US$12.7 billion, the vessel is designed to add approximately 250,000 barrels per day (bpd) to national production. The new vessel will join the four FPSOs currently operating in the Stabroek Block: Liza Destiny, Liza Unity, Prosperity and One Guyana, which together are producing approximately 900,000 to 920,000 barrels of oil per day. President Ali emphasised that once operational, the new FPSO will “push national output above one million barrels a day for the first time”. Uaru, ExxonMobil’s fifth offshore development in the Stabroek Block, targets more than 800 million barrels of recoverable oil. Meanwhile, Whiptail, the sixth sanctioned project, is targeted for start-up in 2027, while Hammerhead, approved as the seventh development, with production expected around 2009. #### 40% of production Meanwhile, the Head of State also clarified that Guyana’s share of Stabroek Block profit oil has increased from 12.5 per cent to 39.8 per cent, largely because the project’s cost bank was recovered earlier than initially anticipated. He explained that whereas as much as 75 barrels out of every 100 previously went toward cost recovery, today only about 20 barrels are allocated to costs. “The production sharing formula has never changed. It remains exactly what was written in the 2016 agreement: royalty first, then up to 75 per cent of production can go to cost recovery; whatever is left is split evenly between Guyana and Stabroek coventurers,” he explained. He further noted that while the US$55 billion expenditure was paid off, the cost bank is not saturated or entirely depleted. “The 20 barrels today account for operating and other costs, which still form part of the cost bank. That which is left is called the ‘profit oil’, and is split evenly between Guyana and the companies. Guyana’s half is about 39.8 barrels out of every hundred. The companies’ matching 39.8 barrels is split three ways between the co-venturers,” he highlighted.

Former Guyana Ambassador to South Africa and Professor Dr. C. Kenrick Hunte, along with Mr. Joseph Persaud and Mr. Darsh Khusial, argue that Guyana may have forfeited billions of United States dollars in oil revenue because it continues to allow broad cost recovery without ring fencing, even after the original investment costs of major projects have effectively been repaid. ... In a detailed analysis titled Ending the 75 Percent Cost Recovery: Examining the Investment Cost for the First Four Investment Projects, Liza 1, Liza 2, Payara and Yellowtail, the three authors, writing on behalf of the Oil and Gas Governance Network (OGGN), contend that Guyana could have earned approximately US$4.7 billion more between 2020 and 2025 had ring fencing been applied. ... The paper examines the operation of the 2016 Production Sharing Agreement (PSA), under which contractors may recover eligible petroleum costs from up to 75 percent of annual oil revenues before the remaining “profit oil” is divided equally between Guyana and the contractor. ... The paper contrasts that outcome with what the authors describe as the current no-ring-fencing arrangement. ... By comparison, they calculate that if ring fencing had been applied once the original investment was recovered, Guyana’s profit share would have increased to approximately US$12.4 billion, or about 20.2 percent of total revenue, a difference of roughly US$4.7 billion. ... Ring fencing is a fiscal mechanism commonly used in petroleum contracts to keep the costs and revenues of individual projects separate. In practical terms, it prevents the costs of developing new oil fields from being deducted against the profits generated by fields that are already producing. ... The authors argue that without project-by-project ring fencing, the introduction of new developments can continue to reduce Guyana’s profit oil even after earlier projects have recovered their original investments. ... They warn that as additional developments such as Uaru and Whiptail come on stream, Guyana could continue to receive a smaller share of profits than would otherwise be possible if costs from each project were accounted for separately. ... In addition to advocating ring fencing, the paper calls for stronger government oversight of the petroleum sector, including real-time auditing of recoverable costs and continuous monitoring of the point at which each project’s investment has been fully repaid. The authors argue that these measures would provide greater transparency, ensure each project bears its own costs and enable Guyana to receive a larger share of the profits once investments have been recovered.

7th oil project must not be approved without ring-fencing, other benefits- Dr. Adams - Kaieteur News ... ## 7th oil project must not be approved without ring-fencing, other benefits- Dr. Adams May 09, 2025 News …says Coalition’s plan to ring-fence oil projects was abandoned by PPP Gov’t ... Kaieteur News- During the A Partnership for National Unity and Alliance For Change (APNU/AFC) tenure in office, the Coalition was actively pursuing a ring-fencing provision for the Stabroek Block. ... A ring-fencing provision would mandate that only costs associated with that development is recovered from the specific project when it starts producing oil. This would avoid the operator, ExxonMobil from adding other expenses to the cost bank which are not related to that project and ensure a higher share of revenue is available to be split with the country. ... Former Executive Director of the Environmental Protection Agency (EPA), Dr. Vincent Adams in response told this newspaper that irrespective of the fluctuating oil price, ring-fencing should be pursued by the GoG. ... “Regardless of oil price, because oil prices will go up and down…ring-fencing should be a requirement on the table to start the discussion with Exxon,” he said. ... Dr. Adams also revealed that the APNU/AFC government was pursuing the implementation of this provision while in office. These plans were however abandoned by the People’s Progressive Party (PPP) when the administration was elected in 2020. ... The former EPA Head noted, “I know for sure the past administration; this was one of Mr. Granger’s highest priorities. I know Dr. (Mark) Bynoe (Former Head of the Department of Energy) was working on this with Exxon, but everything got abandoned as per normal by this current government when they got into office.” ... Dr. Adams pointed to the duplicity of the incumbent administration as he recalled that while Vice President Bharrat Jagdeo was the Leader of the Opposition, he attacked the Coalition for “selling out” the nation’s patrimony by failing to ring-fence the Stabroek Block projects. ... “They sold us out to the foreigners. The oil companies, every time there is a find out there, our people should be sad because nothing comes our way. We are gonna renegotiate those contracts because that’s not what we had in mind,” a passionate ... Government however now supports the non-implementation of this provision since it believes Guyana will benefit from greater revenue in the future, despite the oil price forecast. ... It should be noted that the 2016 PSA, signed by the former Coalition government does not include a ring-fencing provision; analysts therefore suggest that there will not be a breach to the agreement through the introduction of this requirement, since it would not affect expected revenue for the oil company. ... With a new application actively being considered by the GoG for a seventh oil project, the former EPA Head insisted that the project should not be approved in the absence of this requirement. ... He urged, “Ring-fencing must be a must and getting back as to whether we should approve the seventh project or not, absolutely I would say if you do not come to the table, and it’s not only ring-fencing, there are other issues in this contract that needs to be, negotiated. I would say if you do not come to the table to do this, we would not grant you your permit.” ... Dr. Adams maintained that such a bold move was previously made under his stewardship of the EPA for full liability coverage, including an unlimited parent company guarantee. He recalled, “What we told them was thou will not produce one single barrel of oil unless we get that parent company guarantee (and) guess what, within days they came and they signed that parent company guarantee.” ... Consequently, Dr. Adams urged, “We should be withholding the permit if we do not get the fair deal as far as the people are concerned.”