(Kaieteur News) – President Irfaan Ali brought Guyanese some genuinely good oil news this week. He announced that Guyana’s entitlement from production in the Stabroek Block has risen from the historical 12.5% to approximately 39.8%. Even if oil prices had remained unchanged, Guyana would now be receiving more than three times its earlier share. And because of the war on Iran, oil has risen more than 50% from its end-2025 price. That is great news and since I believe strongly in the old advice not to look a gift horse in the mouth, I welcome it.

This two-part column examines first what the increase means and how Guyana’s benefit compares with that of the oil companies. Part II will consider how durable this favourable position is, given today’s high oil price, prospective exploration expenditure and the unchanged terms of the 2016 Petroleum Agreement.

Let us be clear. The movement from 12.5% to nearly 40% is not the result of renegotiation. It follows from the Agreement’s cost-recovery mechanism. In the early years, up to 75% of petroleum could be allocated to recovering exploration and development costs. The remaining profit oil was divided equally, leaving Guyana with 12.5% of gross production. The logic is simple. As accumulated costs are recovered, cost oil falls, profit oil rises and Guyana’s share increases.