THE recent announcement of TotalEnergies’ final investment decision for Suriname’s first offshore oil development, in partnership with APA Corporation, has reignited comparisons between the petroleum agreements of Guyana and Suriname.

It is important to take a broader view when comparing the two countries’ oil sectors. Although Suriname appears to have secured a higher share from its oil production, the overall environment and benefits Guyana has reaped from its agreements offer significant value.

The key differences between the two agreements are royalties and taxes. Suriname has negotiated a royalty of 6.25 per cent, whereas Guyana’s royalty rate with ExxonMobil stands at 2 per cent. Suriname levies a 36 per cent income tax on TotalEnergies, whereas ExxonMobil’s agreement in Guyana effectively waives corporate income taxes. But the context is crucial. Guyana chose to earn its revenue primarily through a profit-sharing agreement, instead of by taxation.

When the contract between Exxon and Guyana was signed, it was a high-risk venture. No oil had yet been discovered offshore, and the government had to provide terms attractive enough to encourage Exxon to invest in exploration.

The terms helped attract Exxon’s investment at a time when the exploration outcome was uncertain. Guyana has since seen six offshore development projects sanctioned, a seventh going through regulatory requirements, and more likely in the coming years. In contrast, Suriname has only secured its first offshore project with TotalEnergies. By 2028, Suriname’s production is expected to reach 220,000 barrels per day, while ExxonMobil’s output in Guyana will be 1.3 million barrels per day by the same time. The more favourable fiscal terms Guyana offered have resulted in a robust and rapid investment pipeline, with far more projects and production.

Furthermore, Staatsolie can participate in offshore developments and has opted to take up a 20 per cent stake in the first offshore project. However, this comes at a steep cost—approximately US$2.1 billion for a US$10.5 billion project. While this participation promises higher returns for Staatsolie and the government, it requires substantial upfront investment. For Guyana, participating in ExxonMobil’s projects would have required the country to raise funds it has never before mustered. With Exxon and its partners committing over US$55 billion in development expenses, the government would have needed over US$10 billion to take a 20 per cent stake. Guyana simply does not have the fiscal capacity to make such investments at this time. Instead, Exxon and its partners wholly make the investments and foot all the risk, while Guyana gets profit oil revenue and royalties.

Guyana has also found other ways to extract value from its resources. The introduction of the Local Content Act has been a major win for the country. This law mandates that oil companies operating in Guyana must hire Guyanese nationals and procure goods and services from local companies in 40 different areas. This has allowed local businesses to tap into the lucrative oil and gas sector, fostering economic growth and allowing Guyanese companies to build generational wealth. The government also encourages contractors to invest in training and capacity building for local workers, ensuring that Guyanese nationals develop the skills needed to take on more technical roles in the industry.

The benefits of this local content legislation are already evident. Guyana is seeing annual benefits to locals of over US$500 million, based on reports from the Local Content Secretariat. In Suriname, there is no local content legislation comparable to what Guyana has put in place. TotalEnergies has committed to spend US$1 billion in Suriname, translating to less on an annual basis over the development period of the project. This gives Guyana a significant advantage, as the benefits of the oil sector are distributed more widely among the population and not limited to direct revenue from production.

So, while Suriname may have secured different fiscal terms in its agreement with TotalEnergies, Guyana’s holistic approach has resulted in greater benefits overall. Guyana has attracted far more investment, has more offshore developments in play, and is set to produce significantly more oil than Suriname in the coming years. Additionally, Guyana’s Local Content Act ensures that the economic benefits of the oil sector extend beyond just government revenues. When viewed from this broader perspective, Guyana’s framework is well-positioned to deliver significant long-term value for its people.