Dear Editor,

OPPOSITION MP K. Sharma Solomon has framed ExxonMobil’s latest exploration permit for Jacunda-1 as a cause for concern. The mistake is in the framing. The permit is what SphereX has urged for months: pushing exploration ahead while Guyana’s current fields are still producing at their peak.

SphereX’s September 2026 model of the Stabroek Block fiscal regime tracks production, government receipts, cost recovery and Natural Resource Fund (NRF) growth from 2027 to 2051. The data suggests that Guyana needs more exploration, not less.

Resource replacement must begin before Stabroek’s decline materially narrows the petroleum-revenue base. Stabroek’s production plateau is substantial, but finite. The screening case reaches 1.3mn bpd in 2028 and holds through 2040, then falls to about 1.13mn bpd in 2041, 783 kbpd in 2046 and 114 kbpd by 2051.

Optimisation can extend the tail. It cannot replace exhausted barrels. Guyana should accelerate exploration and begin preparing another transparent, competitive offshore bid round.

THE HIGH-PRODUCTION YEARS WILL END

The base case starts from about 11 billion barrels of oil equivalent, with roughly 1.2 billion produced before 2026. Without new resources, the model runs out in 2054. These are screening scenarios, not certified reserves and not an ExxonMobil forecast.

It takes years to get from discovery to first oil. Waiting for production to fall before stepping up exploration means starting too late, because once the plateau ends, Guyana’s oil revenue depends on finding, appraising and developing new resources. That is what this permit is for. The MP’s concern, if followed, would slow the very activity that protects future revenue.

THERE IS NO SECRECY

A discovery is not proved reserves. Appraisal drilling, reservoir modelling and commercial assessment take time, and an unchanged public resource estimate reflects that, not concealment.

Appraisal also diverts rigs, money and technical capacity from finding and producing more oil. An operator with this many attractive projects in hand is right to put exploration and production first, while appraising where contracts or development applications require it. How significant Rockhead-1 turns out to be will depend on the appraisal results, not on when it was announced.

Time is also short. An exploration licence has a finite life, and about one-third of the Stabroek Block is currently in force majeure. With the clock running and part of the block already constrained, every rig diverted from exploration costs Guyana future revenue.

COST RECOVERY IS NOT AUTOMATIC FISCAL LOSS

Guyana did not put up any capital, so it cannot lose any. The MP’s claim that cost recovery is a loss to Guyana fails on first principles: a loss requires capital at risk. Under the 2016 Production Sharing Agreement, the contractor funds and carries all exploration spending.

If a well is dry, ExxonMobil and its partners absorb the full cost. Cost recovery is the contractor getting back its own money, through cost oil, within a ceiling and subject to verification. Guyana still receives royalty, and profit oil is split equally between the government and the contractor. At most, recovery affects when the government is paid. It cannot leave Guyana poorer than before the well was drilled.

No capital, no risk, no loss. Our model also found that a project-level ring fence could raise the present value of government receipts if the development schedule stayed the same, but that gain could disappear if it delayed production. Timing is the only real question, and delayed exploration makes it worse.

THE SCALE OF WHAT IS AT STAKE

In the base case, the government collects about US$186.4 billion in petroleum receipts from 2027 to 2051. Of that, US$105.6 billion goes to the Treasury, and the NRF reaches about US$109.6 billion in real terms by 2051.

The effective government take is about 35.7%. These figures depend on the model’s assumptions, but they show the scale at stake. New discoveries could extend the production horizon. A long pause in exploration would leave Guyana with few options once today’s fields mature.

EXPLORATION IS ALSO A STRATEGIC IMPERATIVE

Suriname is moving ahead offshore. Trinidad and Tobago is looking to monetise regional gas. Venezuela’s oil sector is repositioning, and major powers are competing for energy influence. Guyana’s offshore industry is strengthening its ties with the United States, while also drawing Chinese investment through CNOOC. Guyana should deepen those relationships without giving up its own decision-making, and a larger offshore industry needs better maritime surveillance and emergency response.

A PERMIT IS NOT A LOSS

A natural-resource information system is only useful if it keeps permits, work programmes, discoveries, contingent resources, certified reserves, sanctioned developments, recoverable costs and actual receipts separate. They are different stages of the process. Blurring them leaves the false impression that every permit costs Guyana money.

CONCLUSION

The challenge for Guyana is no longer just finding oil, it is sustaining production and revenue once the early discoveries are spent. Any debate on the oil sector should start from depletion, the fiscal terms and the regional competition for investment. The real danger is not that ExxonMobil keeps exploring, it is that Guyana reaches production decline without the next round of discoveries ready to take over.

Slowing the search for oil is the real risk to the country’s future revenue.

Yours truly,

Joel Bhagwandin,

SphereX