US Senators Investigate Exxon in Guyana Summary
This blog is a "US Senators Investigate Exxon in Guyana" Summary.
1. Introduction to US Senators Investigate Exxon in Guyana Summary
U.S. Senators are investigating ExxonMobil’s oil deal with Guyana. Senators Sheldon Whitehouse, Chris Van Hollen, and Jeff Merkley have questioned whether U.S. taxpayers are indirectly subsidizing ExxonMobil’s operations through the country’s tax policies.
Since ExxonMobil struck oil off Guyana’s coast in 2015, the country has experienced a dramatic transformation. Once primarily reliant on sugar, rice, and bauxite, Guyana’s economy is now rapidly expanding thanks to its newfound oil wealth. Analysts predict that by the mid-2020s, Guyana could produce more oil per capita than almost any other nation in the world.
2. The ExxonMobil Deal Explained
The 2016 Stabroek Block Petroleum Agreement (PSA) was signed between the Government of Guyana and ExxonMobil, along with its partners Hess Corporation (now part of Chevron) and the Chinese state-owned company CNOOC Limited. This agreement defines how billions of dollars in offshore oil revenues are developed, shared, and taxed.
Under the PSA, ExxonMobil is entitled to take 75% of oil revenues initially to recoup “recoverable contract costs.” The remaining 25% is then allocated according to the PSA: 50% of profit oil goes to the Government of Guyana, while the remaining 50% is split among ExxonMobil, Hess, and CNOOC based on their respective equity stakes. Vice President Jagdeo told Reuters that ExxonMobil had recovered $33.9 billion of the $41.1 billion it had spent on the Stabroek block, as of January 2025.
A particularly notable feature is Article 15.4, which stipulates that the Government of Guyana pays ExxonMobil’s income taxes out of its own share of profit oil. In 2023, these payments totaled approximately $660 million, rising to roughly $1.2 billion in 2024. Essentially, Guyana is covering the company’s tax obligations before receiving its own revenues—a mechanism that accelerates foreign investment but also reduces immediate government income.
This arrangement has drawn scrutiny from U.S. lawmakers, who note that such payments could be claimed as foreign tax credits (FTCs) in the United States, potentially reducing ExxonMobil’s U.S. tax liability by hundreds of millions annually.
For the Caribbean, the PSA highlights the challenge of balancing rapid foreign investment and economic growth with safeguarding national interests.
3. U.S. Concerns – Taxpayer Subsidies
The Senators have questioned whether American taxpayers are indirectly subsidizing ExxonMobil’s operations in Guyana through foreign tax credits (FTCs).
Under Article 15.4 of the agreement, the Government of Guyana pays ExxonMobil’s income taxes out of its share of profit oil. In practice, this amounted to $660 million in 2023 and roughly $1.2 billion in 2024. If ExxonMobil claims these amounts as FTCs in the United States, it could reduce its domestic tax bill by hundreds of millions annually.
Analysts estimate that limiting FTCs in this way could save U.S. taxpayers $71.5 billion over the next ten years, representing money that would remain in the federal treasury instead of reducing corporate taxes.
4. Implications, Regional Ripple Effects, and Conclusion
With Guyana paying ExxonMobil’s taxes out of its share of profit oil—amounting to $660 million in 2023 and $1.2 billion in 2024—a significant portion of potential government revenue is diverted to cover obligations before the country fully benefits from production. While foreign investment accelerates development, it underscores the need for careful oversight to ensure that the local economy and citizens are not disadvantaged.
Frequently Asked Questions (FAQ)
1. Why are U.S. Senators investigating ExxonMobil’s operations in Guyana?
Senators Sheldon Whitehouse, Chris Van Hollen, and Jeff Merkley are concerned that U.S. taxpayers may be indirectly subsidizing ExxonMobil’s oil operations in Guyana through American tax policies. They want to determine whether Exxon is using tax loopholes to reduce its U.S. tax burden.
2. What is the main issue with ExxonMobil’s Guyana operations?
The main issue is whether ExxonMobil can write off its Guyana costs against its U.S. tax bill, effectively shifting profits overseas while lowering its U.S. tax obligations. Analysts estimate that closing this loophole could save U.S. taxpayers tens of billions of dollars over the next decade.
3. How significant is Exxon’s oil discovery in Guyana?
ExxonMobil, along with its partners Hess and CNOOC, has made more than 30 oil discoveries offshore Guyana, making it one of the largest new oil frontiers in the world. Production continues to rise, with Guyana projected to become one of the top per-capita oil producers globally.
4. How much money is at stake for U.S. taxpayers?
Reports suggest that closing the loophole could save U.S. taxpayers $71.5 billion over ten years. Senators are examining whether current tax rules unfairly benefit ExxonMobil at the expense of American taxpayers.
5. What does Guyana gain from ExxonMobil’s operations?
Guyana receives royalties and a share of oil profits under its production sharing agreement (PSA) with ExxonMobil. While these revenues are transforming Guyana’s economy, critics argue the deal is heavily tilted in Exxon’s favor.
6. Could U.S. tax policy changes affect Guyana’s oil industry?
Yes. If the U.S. closes the tax loophole, ExxonMobil’s profits from Guyana could face higher taxation in the U.S. This would not directly change Guyana’s revenues but could affect Exxon’s overall investment strategy.
7. Who are ExxonMobil’s partners in Guyana?
ExxonMobil operates the Stabroek Block with a 45% stake, partnered with Hess (30%) and CNOOC (25%). Together, they are leading Guyana’s offshore oil development.
8. Why does this investigation matter to Americans?
The investigation highlights how international oil deals and U.S. tax laws intersect. While Guyana benefits from oil revenue, U.S. taxpayers could be losing billions through subsidies or tax breaks that favor ExxonMobil.
References
https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-09-24-2025/card/senators-question-exxon-s-tax-payments-in-guyana-oil-venture-4kgEPieoxwhaFuyhS824?gaa_at=eafs&gaa_n=ASWzDAh8kuZH9L1ABi9AtN3-5g2WFWYYxHxBY_pdsGSG3X7IMarrrAH_F4-xk-X4LoY%3D&gaa_ts=68dd54aa&gaa_sig=t09DSWgYhChA4WU6U7FBOWH6LT5Sxca7AcfVzjfKUXiWYqN3sULPcBnXQKMyNG4z_4_nQZFSGDE_WKe5Ao9TxA%3D%3D (“An independent auditor reported that Exxon's Guyana-related income tax expense was $660 million in 2023 and $1.2 billion in 2024”)
https://www.oggn.org/2025/07/14/exxonmobil-guyana-limited-tax-expense-from-2020-to-2024/
This blog was a "US Senators Investigate Exxon in Guyana" Summary.
By Melissa R. | This content is copyright of West Indian Diplomacy, LLC and may not be reproduced without permission.
She runs West Indian Diplomacy, a Caribbean blog aimed at promoting West Indian history and business in the global marketplace. Melissa has been an attorney for over 10 years. She currently focuses on trademark registration, trademark searches, and office actions. She also has extensive legal experience in the areas of trademarks, copyrights, contracts, and business formations. She owns her own Trademark Law Firm that is virtually based in Florida.
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