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Welcome to the second of our five-part blog series about Guyana, an American ally that has emerged as one of the fastest-growing economies in the world, driven by an oil boom that has transformed the country's economic trajectory. Click on the links to read Part 1 and Part 2.
Key Takeaways from Part 3 are:
- Guyana introduced the 2023 Petroleum Activities Act, raising royalty rates to 10%, lowering cost recovery to 65%, and adding a 10% corporate tax — creating one of the most advanced oil regulatory regimes in the Western Hemisphere.
- The Local Content Act and Natural Resource Fund Act aim to prioritize Guyanese firms and ensure transparent management of oil revenues, supported by reforms in arbitration, AML/CFT compliance, and global standards like EITI.
- Despite progress, older contracts like the Stabroek Block PSA remain in force with terms seen as overly favorable to oil companies, highlighting ongoing debates over fiscal fairness and governance amid rapid economic growth.
Part 4, slated for release on December 15, 2025, will focus on international trade and customs, and the importance of U.S. and global companies to be aware of who their local partners are up and down the whole of their supply chain.
Regulatory Developments in Guyana
Guyana's revenue, while transformative, has introduced new challenges for governance, fiscal management, and equitable development. To manage this rapid growth, Guyana has modernized several key laws and institutions. The 2023 Petroleum Activities Act replaced a decades-old legal regime with one of the most advanced regulatory frameworks in the Western Hemisphere. The new law introduced higher royalty rates (10%), a lower cost recovery ceiling (65%), and a 10% corporate tax on future oil agreements. In parallel, the Local Content Act (2021) aims to prioritize Guyanese workers and firms in oil sector operations, while the Natural Resource Fund Act (2021)seeks to ensure transparent management of oil revenues. Further institutional reforms include updates to arbitration law, progress in anti-money laundering (AML/CFT) protocols, and compliance with international standards like the Extractive Industries Transparency Initiative.
However, the regulatory environment remains bifurcated. The original production sharing agreement for the massive Stabroek Block, signed in 2016, remains in force and contains terms viewed by many as overly favorable to oil companies. Under that agreement, the Guyanese government pays the corporate taxes of the oil consortium, which has sparked debate over fiscal fairness and compliance with newer legislation. Despite these concerns, Guyana has made tangible progress in strengthening transparency, legal certainty, and the overall investment climate.
Guyana's oil and gas industry has continued to grow at an extraordinary pace, attracting foreign companies eager to capitalize on its offshore reserves. While ExxonMobil remains a dominant force through its leadership of the Stabroek Block consortium, other international firms have expanded operations to tap into new opportunities. The country faces the dual challenge of managing unprecedented economic expansion and ensuring effective oversight of oil revenues and contracts. Transparency in royalty rates, taxation, and public spending continues to be a critical issue as Guyana seeks to translate its boom into sustainable, broad-based development.
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