Ring-Fencing Debate Intensifies as Exxon’s Hammerhead Project Nears Review
Georgetown, Guyana—The government faces renewed pressure over its petroleum governance policies, particularly the absence of ring-fencing provisions in Guyana’s Production Sharing Agreements (PSAs). The issue gained traction before ExxonMobil’s Hammerhead project, the seventh oil development in the prolific Stabroek Block, was reviewed.
At a recent press conference, Opposition Leader Aubrey Norton emphasized that the state must enforce the law, particularly regarding Environmental Impact Assessments (EIAs) and fiscal protections like ring-fencing.
“We believe ring-fencing is a useful tool,” Norton stated. “We will look at every specific case and ensure there’s ring-fencing where necessary.”
Dr. Vincent Adams, a U.S.-trained petroleum engineer and former head of the Environmental Protection Agency under the APNU+AFC government, has been vocally critical of the current administration’s failure to implement ring-fencing. He contends that without it, ExxonMobil can recover costs from multiple projects using oil revenues from a single one, reducing Guyana’s short-term revenue.
“Billions of dollars are being lost without ring-fencing,” Adams asserted. “It’s time the government is honest with the people.”
The Ministry of Natural Resources, however, rebutted Adams’ criticisms, stating:
“Every man, woman, and child knows it was the APNU+AFC that signed the Stabroek Block PSA in secret and hid it from the public for a year. That contract had no ring-fencing clause.”
The Ministry further reminded the public that the contract also contains a stabilization clause, which prevents the government from making unilateral fiscal changes unless Exxon and its partners agree—and requires compensation if economic losses are incurred due to new laws or policies.
Despite this, Adams pointed to campaign promises made by then-Opposition Leader Barat Jagdeo, who had pledged to renegotiate the oil contracts if elected.
“Let me tell you, after March 3rd, a lot of those contracts will be renegotiated,” Jagdeo had said at a PPP/C rally in 2020.
Adams accused the PPP/C of reversing its position once in power and compromising national safety by allegedly allowing production above safe operating limits.
Ring fencing remains one of the most contentious issues in Guyana’s oil sector. While the current government insists that prior contracts tie its hands, critics argue it has willingly upheld clauses that limit fiscal reforms and reneged on promises of renegotiation.
The Hammerhead project’s pending review will likely reignite debate over safeguarding Guyana’s oil wealth while ensuring transparency and fiscal responsibility.
