Dr. Vincent Adams Calls for Ring-Fencing Ahead of ExxonMobil’s 7th Oil Project.
By Antonio Dey | HGP Nightly News
As ExxonMobil Guyana prepares to apply Hammerhead, its seventh oil production project, petroleum engineer and former EPA Head Dr. Vincent Adams warns that ring-fencing must be urgently implemented to prevent further national revenue losses.
Speaking to HGP Nightly News, Dr. Adams explained that ring-fencing is a critical financial safeguard designed to ensure that losses or costs associated with one oil project do not negatively impact the profitability of other successful ones.
“It’s already been publicly documented—the people of Guyana are losing billions of dollars without ring-fencing in place,” Adams stated.
Ring-fencing is a clause that prevents an oil company from using expenses from one project to reduce taxable profits from another. ExxonMobil can recover up to 75% of monthly oil production as “cost oil” under the Production Sharing Agreement (PSA), with only the remaining 25% being subject to profit sharing between Exxon and the Government of Guyana.
“Without ring-fencing, Exxon can stack unrelated costs from future projects onto existing ones like Liza, essentially draining profits that would otherwise be shared with the people of Guyana,” Adams argued.
Dr. Adams, a former executive in the APNU+AFC coalition, revealed that his administration had made ring-fencing and an unlimited parent company guarantee key conditions before approving future oil permits—including the Lisa Phase 2 project.
“We told them plainly: no Lisa 2, or any other permit, without these guarantees. Exxon agreed. But this government removed that requirement, which is now at the center of an ongoing court case,” he said.
Oil production is an inherently risky endeavor. Ring-fencing helps limit national exposure by ensuring that failed or less-profitable projects like Payara or Yellowtail don’t become a financial burden on otherwise profitable ventures. Guyana’s earnings are diminished without this clause, while Exxon’s cost recovery remains unchecked.
“This is not just good policy; it’s standard international practice,” Adams emphasized.
With Hammerhead now on the horizon, Dr. Adams says the government still has the leverage to make ring-fencing a mandatory condition for project approval—and must do so to fulfill its duty to protect Guyana’s economic future.
The AFC has also condemned the government’s “flagrant disregard” for transparency and good governance, accusing it of caving to corporate pressure at the expense of national interest.
- 75% of oil goes to cost recovery (recoverable costs)
- Remaining 25%: Profits split 50/50 between ExxonMobil and the Government of Guyana
- Plus 2% royalty on total oil production to the government
