A letter submitted to the editor by Greg Lynch offers a defense of Guyana’s Production Sharing Agreement (PSA) with ExxonMobil and its partners, pushing back against concerns raised in a March 22, 2025 Kaieteur News editorial titled “Full 50% Profit Share,” which questioned whether Guyana is truly realizing its rightful share of oil revenues.
Lynch opens by affirming that Guyana does in fact receive its 50 percent share of profit oil for every barrel sold, as stipulated in the PSA. He clarifies that this share is calculated after the 75 percent cost recovery provision is applied, with the remaining profit oil split evenly between Guyana and the ExxonMobil consortium. He argues that suggesting otherwise risks giving the public a misleading picture of how the agreement functions.
On the frequently debated issue of no ring-fencing, whereby costs from new projects can be recovered against revenue from existing ones, Lynch acknowledges the concern but contends the arrangement has enabled ExxonMobil to develop multiple projects simultaneously at an accelerated pace. He argues that a ring-fenced structure could have slowed both production and national earnings, pointing to Guyana’s rapid expansion from a single producing field to several major developments in a short period.
Lynch also draws attention to investment risk, noting that ExxonMobil has committed billions of dollars to offshore exploration and development entirely at its own financial exposure. He emphasizes that Guyana bears no liability for expenditures tied to unsuccessful exploration, while benefiting from production revenues without having contributed upfront capital beyond regulatory approvals.
While conceding that oil prices, production levels, and ongoing investment will influence the scale and timing of revenues, Lynch argues these are standard features of the global petroleum industry rather than flaws specific to Guyana’s agreement. He cautions against characterizing the cost recovery framework as a trap, suggesting it is better understood as a structure that has facilitated rapid sector growth and early revenue generation.
Lynch concludes by calling for continued focus on strengthening oversight, ensuring transparency, and maximizing long-term value for Guyanese citizens, while affirming that informed public debate remains essential to that process.
Source: News Room Guyana
