THE fiscal terms of Guyana’s Production Sharing Agreements (PSA) have been the subject of debate and contention for some time. There has also been considerable misinformation – some willful and intentional – around profit sharing, royalty rates, cost recovery, Guyana’s obligations, and those of the Stabroek coventurers, to advance the narrative proffered by some that Guyana is getting a bad deal.
But the government, despite some of the challenges that come with a rapidly expanding oil sector and economy, has heeded the advice of experts, bi-lateral partners and consultants in and outside Guyana to create a framework to maximise the gains from production for Guyanese. Guyana is the global leader in total offshore discoveries since 2015, with 11.2 billion barrels of oil equivalent, amounting to 18% of discovered resources and 32% of discovered oil, according to a 2022 report from Rystad Energy.
Under the terms of the 2016 Stabroek Block PSA, Guyana is entitled to two per cent of all pre-cost revenues as a royalty and 50 per cent of all profits with a cost recovery ceiling of 75 per cent, which is roughly average when compared to agreements with other frontier oil and gas countries international consultancy Wood Mackenzie found in a 2020 report.
The average government take, which refers to the value received by the government over the life of a license in the form of royalties, profit sharing and taxes, will generally be around 60 per cent of profits or 14.5 per cent of overall revenues when both the pre-cost royalty and the post-cost profit sharing are accounted for and is expected to increase until 2025. Guyana’s earnings topped US $1.2 billion last year with another US $1.6 billion expected this year. Analysts predict that the country could reach US $7.5 billion annually in 2030.

Back in March, the Ministry of Natural Resources announced that all 14 blocks (three deepwater and 11 shallow-water) on offer in Guyana’s first competitive licensing round garnered expressions of interest. All blocks on offer in the licensing round will be subject to the terms of the newly updated model PSA, which reflects the significant change in Guyana’s status since the Stabroek PSA was signed.
The fiscal terms of the new model PSA include a 10 per cent royalty rate and 65 per cent cost recovery ceiling. The profit share will remain 50/50 between the government and the contractor, with a new corporate tax of 10 per cent.
At the time of the signing of the Stabroek PSA, generous fiscal terms helped draw in companies to invest in an unproven frontier region. Now, as Guyana can boast significant offshore reserves, and future deals will reflect lower risk levels and offer a higher percentage of revenues to the government.

Guyana’s de-risked offshore basin allowed it to push for additional revenues from future projects, reflecting the country’s more mature status as an oil producer and the lower capital risk that potential investors will face, especially in shallower blocks. Exploration, however, is not without risk and balancing the fiscal terms should continue to yield interest from global firms.
Ultimately, claims of exploitation and an imbalance are often exaggerated to sow doubt that Guyana can rise to the occasion and secure its place among the top ranks of energy producers worldwide. To date, those claims continue to be daunted by prudent fiscal management, a robust judiciary based on the rule of law and an increasingly informed and active Guyanese citizenry who hold both the companies operating in Guyana and the government accountable.

Guyana is on the right path and oil revenues are being reinvested in the country and the local economy. The country’s oil and gas sector will only continue to expand, and it is critical that the public conversation reflects the complex details of cost recovery, contracts, royalties, and all other aspects as accurately as possible.