2016 Exxon deal: APNU’s Terrence Campbell admits new PSA fiscal terms vastly improved 

Parliamentary lead for the A Partnership for National Unity (APNU), Terrence Campbell, on Friday admitted that the fiscal features of the new People’s Progressive Party’s (PPP) Production Sharing Agreement (PSA) template are a vast improvement over the widely criticised 2016 PSA, which was crafted by the APNU and coalition partner the Alliance for Change (AFC) for the signing with Exxon Mobil and its co-ventures, Hess and CNOOC, for oil and gas production in the lucrative Stabroek Block.
Campbell made the commendation during the party’s weekly virtual press conference, as he was asked his thoughts about the document.
“I have glanced at the new PSA. It is an improvement of what existed previously in terms of royalties, in terms of cooperation tax, and in terms of cost recovery. The PSA is an improvement on what was there before, but it would’ve benefited from wider consultation,” said Campbell, who previously served as the Opposition’s representative on the Natural Resource Fund’s Investment Committee.
The Government is currently in the process of signing PSAs with a number of incoming oil and gas exploration companies that have won blocks offshore Guyana and is using a uniform, standard PSA to sign with each company. Key fiscal terms included in the PSA include a 10 per cent royalty, up from two per cent in the 2016 agreement, a 10 per cent corporate tax, a 50/50 profit-oil split, and a 65 per cent cap on cost-oil recovery. These provisions represent significant improvements over the widely criticised 2016 Stabroek Block PSA signed by APNU, as it strengthens national revenue safeguards and includes stricter relinquishment, decommissioning, and training fee requirements.
In contrast, the 2016 PSA sees a 75 per cent cost recovery, meaning up to 75 per cent of production may go to the companies to recover operational and capital costs; of the remaining 25 per cent, half goes to Guyana in a 50/50 profit-sharing agreement. The 2016 PSA also sets the royalty at two per cent; however, the contract included zero-rated corporate tax for the oil companies, meaning Guyana did not receive a direct tax on company profits during early production years.
Following the 2015 oil discovery offshore Guyana, the then APNU+AFC Government signed Guyana’s first PSA in June 2016. However, the contract has continuously been described as “lopsided”, as it is believed that the Government bent to the pressures from Exxon for a quick agreement, particularly given that the agreement was signed just days before Exxon made the announcement of its second major discovery. Following the signing, the APNU/AFC Government vehemently fought to keep the PSA contract a secret, as well as keeping it secretive that the agreement included US$18 million. The contract also included a “bridging deed” that made costs recoverable retroactively to 1999.
The 2016 PSA received widespread criticism. Nonetheless, over the years APNU and AFC executives have continuously defended the document.
The 2016 Agreement also includes a “stability clause” that prevents unilateral amendment or renegotiation without contractor consent, limiting future bargaining power. This has made it impossible for the new People’s Progressive Party/Civic (PPP/C) to negotiate the contract since taking over the helm of Government in 2020.

New agreements
However, the Government has sought to extract more benefit out of the arrangement through the utilisation of the natural gas offshore, with the construction of a Gas-To-Energy (GTE) power plant that will be able to generate some 300 megawatts of power and reduce electricity costs to Guyanese by more than half.
As the Government sought to enter new agreements with other companies following a 2022 Oil Blocks Auction, in 2023 it released the draft model petroleum agreements for shallow and deep-water blocks that were placed on auction. The Government has since begun signing new PSAs with the companies that won blocks during the auction.
The Government most recently signed with Ghana-based, women-led oil and gas company Cybele Energy Limited earlier this month. Cybele Energy, which was awarded shallow-water Block S7, will be operating in partnership with Elemental Energies to explore the almost 1500-square-kilometre block located offshore Guyana.
Cybele was among the successful bidders emerging from Guyana’s 2022 Licensing Round, which drew interest from numerous international oil and gas players. Out of 14 blocks offered, including shallow- and deep-water blocks, eight were awarded in October 2023. Cybele was one of six companies that bid on eight out of the 14 blocks.
Cybele’s signing followed closely on the heels of a mid-November signing for shallow-water Block S4 with a consortium consisting of QatarEnergy (35 per cent), TotalEnergies (40 per cent, operator), and PETRONAS (25 per cent).