Guyana's Oil Boom: Real Growth or Mirage?

Guyana, a nation of just 750,000 people, is undergoing one of the most dramatic economic transformations in the world. Fueled by deepwater oil discoveries and led by ExxonMobil and its partners, the country reported over US$18 billion in oil exports in 2024 alone. With real GDP growing by 43.5% in 2024 and projected to rise by another 10.6% in 2025, Guyana now boasts a per capita GDP exceeding US$20,000, placing it among the highest in LATAM. But beneath the headline growth figures lies a more complex reality.

Oil production is physically happening. Exports are real. And public investment in roads, hospitals, housing, and power generation is surging. Non-oil sectors like construction, manufacturing, services, and agriculture are expanding robustly. Jobs are being created. Credit is growing. In short, Guyana is not just experiencing "paper growth." Real economic output is increasing.

But for the average Guyanese citizen, the oil boom feels distant. Much of the economic gain is externally captured. The oil industry is capital intensive and operated almost entirely by foreign firms. Most of the revenues are flowing outward not because of corruption, but because of the 2016 Petroleum Agreement's structural design.

The 2016 agreement allows Exxon and its partners to recover up to 75% of monthly oil production as cost oil. Of the remaining 25%, the "profit oil" is split 50/50 between the government and the consortium. The government also receives a flat 2% royalty. Critically, Exxon and partners are exempt from paying corporate income taxes directly the government pays on their behalf. This means that during the cost recovery phase (expected to last years), Guyana receives only about 14.5% of oil revenue far below the 40–60% seen in better-negotiated contracts globally.

Here's how the numbers work under the 2016 Stabroek contract:

• Suppose a barrel of oil sells for US$80.

• 75% of that (US$60) can be claimed by Exxon and partners as cost oil. This goes to recover exploration, development, and operational expenses.

• The remaining 25% (US$20) is designated as profit oil.

• This profit oil is split 50/50, meaning:

  • The Government of Guyana receives US$10

  • The consortium keeps US$10

• A 2% royalty is also paid to the Government on gross production — in this case, US$1.60 per barrel.

• However, under this contract, the Government pays the contractor's income tax out of its own share, reducing the real fiscal benefit further.
  

In this example, out of US$80 per barrel, the government nets only approx US$11.60, or roughly 14.5% of the total oil value among the lowest government takes globally for offshore oil. Meanwhile, once cost oil is recovered, the contractor can repatriate profits. Since most of the equipment, services, and inputs are imported, and major shareholders are foreign, most of this money exits the country.

In 2024, despite generating over US$18 billion in oil export value, Guyana's balance of payments surplus was just US$113 million. This is because the majority of the earnings were offset by cost recovery payments and capital account outflows, including profit repatriation and FDI-related withdrawals. Much of the money spent on public infrastructure also flows back out via imports, expatriate labor, and foreign contractors. Foreign Direct Investment (FDI) inflows to Guyana primarily from ExxonMobil, Hess, and CNOOC have financed offshore oil platforms, exploration, and FPSO deployment. But these inflows come with contractual entitlements:

• After initial investment, foreign firms are entitled to recover costs and repatriate profits.

• Once cost recovery occurs, their share of profit oil ( approx12.5% of total value) is booked as FDI income, which is then sent back to parent companies abroad.

• In 2024 alone, over US$3.9 billion left Guyana through these mechanisms.
  

Additionally, ongoing imports of inputs and payments to overseas contractors further widen the financial outflows. As a result, even though Guyana is receiving record levels of investment on paper, much of the liquidity does not remain in the domestic banking system or economy. This explains why despite surging GDP and oil revenue, net foreign exchange accumulation is modest, and why local economic spillovers jobs, industrial supply chains, or reinvested profits remain limited. This structural imbalance is not a result of capital flight or mismanagement. It's a predictable outcome of a contract that prioritizes early investor returns over national capture.

Given its tiny population, Guyana doesn’t need hundreds of billions to become a thriving, inclusive economy. With just a modest improvement in revenue capture through better contract terms, improved local content, and targeted taxation the country could rapidly fund universal healthcare, education, climate-resilient infrastructure, and a sovereign wealth fund to benefit future generations. Instead, the current model has led to soaring GDP figures but only modest improvements in quality of life. Inflation is officially low, but food and housing costs have risen. Public wages are rising, but not as fast as oil earnings. Services and infrastructure are improving, but capacity constraints and import dependency dilute the impact.

Guyana is not trapped yet. New oil blocks are being auctioned with far better terms: 10% royalties, 65% cost recovery caps, and proper taxation. These deals promise a significantly larger national share. But the early contracts, especially the Exxon-led Stabroek block, will define the country's economic trajectory for the next decade. The question isn't whether Guyana is growing. It clearly is. The question is who benefits from that growth and how long it will take before the average Guyanese family feels the wealth that lies beneath their feet.