Known unknowns and Guyana’s petroleum fiscal regime


As far as I can determine, a standard formulation of Guyana’s fiscal regime for its petroleum sector would describe this as ‘The Terms and Conditions that are applied to both the Owner (State) and Contractor (Exxon and its partners) for conducting their business within an integrated framework; from exploration activities, right through the production chain (upstream to downstream), as well as trading’. In other words, those laws and regulations that govern the distribution of economic benefits (gains) derived during this integrated business process. Such a regime would, therefore, determine 1) production and sales revenues generated; 2) allocation of risks between Owner and Contractor; 3) profitability of the petroleum business; and 4) the sustainability of investment flows to the sector.

When defined in this comprehensive manner, energy analysts share the consensus view that petroleum fiscal regimes are, principally, a function of five variables, namely, 1) its clarity/ stability/governance; 2) the instruments/tools/taxes utilized; 3) the administration/governance; 4) the broader economic context; and 5) the characteristics of Guyana’s petroleum finds (especially crude quality, location, and size). The metrics of these variables are typically measured using a variety of techniques, including interviews, expert-opinion assessments, surveys and the use of proxies. Given the variables identified, one can safely conclude that there are many “known unknowns” which help determine fiscal outcome.

On this point, readers should recall the unknowns and therefore risks, which are deeply embedded in Guyana’s petroleum sector. These include 1) lengthy exploration/development phase; 2) geological risk (offshore location and depth); 3) geo-political risk (Venezuelan border controversy); 4) environmental; 5) resource depletion/exhaustion; 6) traditional global price/output volatility/ uncertainty; and 7) political risk (as captured in the notions of Guyana economic nationalism versus foreign exploitation)…..


‘Warts and all’: the fiscal regime of the 2016 PSA remains a win for Guyana

Introduction Last Sunday’s column introduced two far-reaching observations concerning Guyana’s 2016, Production Sharing Agreement (PSA).

By ,

The Guyana 2016 PSA Fiscal Regime: Why the whole is more than the sum of its parts

Introduction The observation was made much earlier in the series and repeated for emphasis last week: Guyana’s present petroleum fiscal regime encompasses both 1) its basic constitutional, economic, financial, and accounting legislation, as well as 2) the specific terms and conditions enshrined in the 2016 Production Sharing Agreement (PSA).

By ,

Further elaborations on the fiscal regime of Guyana’s 2016 PSA

Introduction Last week’s column identified several of the ‘known unknowns’, as these are termed in strategic management.

By ,

Policy trade-offs and Guyana’s 2016 Oil and Gas PSA

Introduction Last week’s column established that the mechanism of ring-fencing for determining recoverable cost is not, unambiguously, to Guyana’s benefit.

By ,

Guyana’s PSA fiscal regime: Ring-fencing and other trade-offs

Introduction In the absence of the explicit ring-fencing of costs, the Guyana 2016 Production Sharing Agreement (2016) has provoked unqualified and perhaps even one-sided condemnation.


Not Ready to Subscribe ?

You can still join over other 15,000 subscribers and receive FREE breaking news alerts as they happen and the morning brief featuring top stories of the day. 

Your browser is out-of-date!

Update your browser to view this website correctly.

We built using new technology. This makes our website faster, more feature rich and easier to use for 95% of our readers.
Unfortunately, your browser does not support some of these technologies. Click the button below and choose a modern browser to receive our intended user experience.

Update my browser now