Guyana’s holistic approach to its oil sector will ultimately deliver more benefits than Suriname’s

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 Guyana and Suriname oil deals.

It is important to take a broader view when comparing the oil sectors of the two countries. While Suriname appears to have secured a larger share of its oil production, the global environment and the benefits Guyana has reaped from its deals offer significant value.

The key differences between the two deals are royalties and taxes. Suriname has negotiated a royalty of 6.25%, while Guyana’s royalty rate with ExxonMobil stands at 2%. Suriname levies a 36 percent income tax on TotalEnergies, while the ExxonMobil deal in Guyana effectively exempts corporate income taxes. But context is crucial. Guyana chose to raise its revenue primarily through a profit-sharing arrangement, rather than taxation.

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

The terms helped attract Exxon’s investment at a time when the outcome of the exploration was uncertain. Since then, Guyana has 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 favorable tax conditions offered by Guyana have resulted in a robust and rapid investment portfolio, with many more projects and production.

In addition, Staatsolie can participate in offshore developments and has chosen to take a 20% stake in the first offshore project. However, this comes at a high cost: approximately $2.1 billion for a $10.5 billion project. Although this stake promises higher returns for Staatsolie and the government, it requires a substantial initial investment. For Guyana, participating in ExxonMobil projects would have required the country to raise funds it had never raised before. With Exxon and its partners committing more than $55 billion in development costs, the government would have needed more than $10 billion to take a 20 percent stake. Guyana simply does not have the fiscal capacity to make such investments at this time. Instead, Exxon and its partners make the full investments and bear all the risks, while Guyana gets profits 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 victory 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 enabled local businesses to tap into the lucrative oil and gas sector, fostering economic growth and enabling Guyanese businesses to create 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 for locals of over US$500 million, according to reports from the Local Content Secretariat. In Suriname, there is no local content legislation comparable to that which Guyana has established. TotalEnergies has committed to spending US$1 billion in Suriname, translating into less annually over the project’s development period. This gives Guyana a significant advantage as the benefits of the oil sector are distributed more widely among the population and are not limited to direct income from production.

So while Suriname may have secured different tax 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 expected to produce far more oil than Suriname in the coming years. In addition, Guyana’s Local Content Act ensures that the economic benefits of the oil sector extend beyond government revenue. When viewed from this broader perspective, Guyana’s framework is well positioned to deliver significant long-term value for its people.