No ring-fencing likely on Guyana’s next oil project — and the profit share could fall back to 12.5%
Longtail, the eighth project in the Stabroek Block, is still under review — and a government source has told Kaieteur News that if it is approved, it is “not likely to feature a ring-fencing clause as the 2016 Production Sharing Agreement makes no provision.”
The same source said ring-fencing cannot be included unless the contract is renegotiated, which the government has refused.
The agreement itself does not just leave the question open — it decides it the other way. Article 11.5 provides that the quantity of cost oil or cost gas used to satisfy recoverable costs “may be allocated by the Contractor to production from any Field or Fields.” Article 11.2 recovers costs from oil and gas “produced and sold from the Contract Area” — the whole Stabroek Block, not a single field or project — capped at 75 per cent of total monthly production. Article 11.3 carries any shortfall forward into the following months, with no time limit, and Article 11.4 then splits what is left fifty-fifty for each field.
That is what makes the question matter now. In July, ExxonMobil finished recovering US$55 billion of investment, about two years ahead of schedule, and the cost pool emptied. Cost recovery fell from 75 per cent of monthly production to 20 per cent, and Guyana’s share of profit oil rose from 12.5 per cent to 39.8 per cent, on top of its 2 per cent royalty — a change President Irfaan Ali confirmed. Kaieteur News reports that approving another project “could see Guyana’s share of profits fall from the current 39.8% to just 12.5%.”
Longtail would be the first gas-focused development in the block. ExxonMobil requested approval in March 2026 and has filed environmental studies with the Environmental Protection Agency. The plans describe 24 to 60 development wells, drilling from 2027 into 2031 and beyond, subsea installation from 2028, and the floating production vessel installed and started up between 2028 and 2031.
Guyana has been urged to ring-fence before. The International Monetary Fund called for it in three separate reports in 2017, 2018 and 2019, warning that “this asymmetrical treatment of profit and cost oil will benefit the contractor at the expense of delaying government revenue.” The United Nations Development Programme, Chatham House and the World Bank have each called for a ring-fencing provision for every project.
ExxonMobil Guyana president Alistair Routledge argued the other side at the Georgetown Chamber of Commerce and Industry’s 2026 Energy Luncheon in September. “Ultimately, ring-fencing does not change, if you do exactly the same number of projects you would have done with or without ring-fencing, it doesn’t change the gross revenue that the government sees, that the country sees. What it does is just change the timing,” he said, adding that in deep water, ring-fencing “is something we should be cautious about.”
That timing argument holds only where every project succeeds. The Intergovernmental Forum on Mining’s own worked example shows that where one project fails and its costs are carried against a producing one, US$946 million in possible government revenue is permanently lost — not deferred.
The government has added terms to the 2016 agreement before: it introduced a flaring fee and passed the Local Content Act in 2021, which reserves 40 service areas for Guyanese companies — neither of which was in the original agreement.
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