Guyana Petroleum Activities Act No. 17 of 2023

Mechanism

The Petroleum Activities Act 2023 is the foundational upstream oil-and-gas statute for Guyana, replacing the 37-year-old Petroleum (Exploration and Production) Act 1986 — the legal architecture under which the transformative Stabroek Block PSA was signed in 2016 and which had been widely criticised as inadequate to govern a nation on course for 2.5+ mb/d output.

Fiscal terms under the PAA (applicable to new agreements):

• Royalty: 10% gross royalty payable to the State (vs. 2% under the 1986 Act / Stabroek PSA).
• Cost-recovery ceiling: 65% of gross production (vs. 75% under the Stabroek PSA).
• Corporate income tax: 10% on petroleum income.
• Profit-oil split: Set by the PSC; the PAA itself defines the outer parameters and mandates that all new PSCs comply with its fiscal floors.

Structural modernisation:

• The Act creates a consolidated Minister-administered licensing regime (Petroleum Licences,

Petroleum Agreements, Petroleum Authorisations) replacing the fragmented 1986 structure.

• Mandatory decommissioning-fund obligations on operators throughout field life.
• Strengthened local-content compliance obligations cross-referencing the Local Content Act 2021

(Act No. 18 of 2021).

• Environmental management plans required before any drilling authorisation is issued.
• Improved transparency: PAA requires annual Ministerial reporting to the National Assembly on

petroleum sector revenue receipts and compliance status.

Grandfathering of the Stabroek PSA: The Stabroek Block PSA (ExxonMobil/Hess/CNOOC, first signed 1999, revised 2016) is explicitly grandfathered under its original terms. The 2016 PSA's 2% royalty and 75% cost-recovery ceiling remain intact for Stabroek and any other pre-PAA agreements in force at commencement. All future bid rounds (post-August 2023) will be conducted under PAA terms, widening the government's take on incremental Guyanese acreage materially.

Downstream implications

• Guyana 2027 ramp: Guyana is targeting 2.5+ mb/d production by 2027 (Stabroek Yellowtail

FPSOs Phase 3–4). PAA fiscal terms will shape the government-take on any new acreage awarded during the production scale-up; Stabroek itself remains under the legacy PSA.

• New bid rounds: The next offshore licensing round post-PAA commencement will see operators

facing materially higher government-take per barrel than the Stabroek consortium — important for modelling prospective IRRs on deepwater blocks outside the Stabroek perimeter.

• NRF inflows: Higher royalty receipts from new PAA-governed agreements flow into the Natural

Resource Fund (NRF Act 2021), whose withdrawal rules were further amended in 2024 (see Fiscal Enactments Amendment Act 2024, pending queue).

• Sector-wide: The PAA's decommissioning and local-content cross-references with Act No. 18

of 2021 create an integrated regulatory stack that all future Guyanese petroleum-sector entrants must navigate — raising compliance costs but also legal certainty relative to the 1986 Act.

Open questions

• Will CNOOC's divestiture of its Stabroek interest (ONGC Videsh acquisition in progress as of

2025) trigger any re-examination of the Stabroek PSA grandfathering, or does it transfer under the same legacy terms?

• Has the Ministry of Natural Resources issued any implementing regulations under the PAA setting

out model PSC terms and the first post-PAA bid-round criteria?

• The PAA's local-content cross-reference: does it extend the Local Content Act 2021 Secretariat's

audit powers to cover any new PAA licensees admitted after August 2023?