U.S. Lawmakers Question ExxonMobil’s Tax Breaks From Guyana Oil Deal

News Americas, WASHINGTON, D.C., Weds. Sept. 24, 2025: The political and fiscal stakes around Guyana’s oil boom just got sharper. Three U.S. Senators have put ExxonMobil in the hot seat, demanding clarity on whether the terms of its 2016 Stabroek Block Petroleum Agreement (PA) with Guyana are allowing the oil giant to reduce its U.S. federal tax liability at the expense of American taxpayers.

The ExxonMobil Guyana offices at 86 Duke Street in Georgetown, Guyana. Photographer: Jose A. Alvarado Jr./Bloomberg via Getty Images

In a detailed September 23rd letter to ExxonMobil Chairman and CEO Darren Woods, Senators Sheldon Whitehouse (Rhode Island), Chris Van Hollen (Maryland), and Jeff Merkley (Oregon) raised alarms over how the company’s cost recovery terms and Guyana’s arrangement to pay ExxonMobil’s income tax from its share of profit oil could amount to a U.S.-backed subsidy for foreign oil production.

“American taxpayers may be subsidizing ExxonMobil’s foreign oil production, which they do in partnership with a Chinese state-owned company,” the senators wrote, noting ExxonMobil’s joint operations with Hess (now Chevron-owned) and CNOOC that produce roughly 900,000 barrels per day offshore Guyana.

The Core Issue: Tax Credits and Cost Recovery
Under the 2016 PA, ExxonMobil and partners recover up to 75 percent of oil revenue as cost oil until their investment is recouped, with the remaining 25 percent split with the government. Crucially, Guyana pays ExxonMobil’s taxes from its own profit oil share — a structure critics say allows the company to count those payments as foreign tax credits (FTCs) and shrink its U.S. tax bill.

The senators argue that U.S. “dual capacity” rules, which apply when companies both pay taxes and receive economic benefits abroad (like drilling rights), may be exploited to turn what is essentially a subsidy into a creditable tax expense.

Billions in Potential Impact
The lawmakers point to a 2024 U.S. Treasury proposal that would have closed this loophole, limiting the FTC portion to what a non-dual capacity taxpayer would owe. Treasury estimated that closing the gap would save U.S. taxpayers $71.5 billion over ten years.

They warn that without reform, contracts like Guyana’s allow multinationals to structure payments in ways that “blur the distinction” between taxes and economic benefits, resulting in tax advantages unavailable to ordinary businesses.

A Bigger Debate: Climate, Sovereignty and Subsidies
The letter contextualizes Guyana’s oil development in broader climate terms, noting that “Guyana, a former climate leader, has embraced oil as a route to prosperity, even as sea level rise could claim its capital, Georgetown, by 2030.”

It also touches on political optics: at a time when the U.S. IMF estimates $600 billion in annual fossil fuel subsidies, the senators argue that ExxonMobil — which has invested over $60 billion in Guyana’s seven approved offshore projects — does not need further tax breaks, especially when partnered with a Chinese state firm.

Demand for Transparency
The senators submitted seven detailed questions, requesting ExxonMobil clarify whether it directly paid any Guyanese income taxes in 2023 or 2024, or if all payments were made on its behalf. They seek a full accounting of how these payments are treated under U.S. tax rules, with responses due by October 23, 2025.

This latest development comes as Guyana is projected to become the world’s fastest-growing oil producer through 2035, with production expected to reach 1.5 million barrels per day by 2029. How ExxonMobil answers could influence not only public perception of its role in Guyana’s boom, but also U.S. tax policy toward multinational oil producers going forward.

In 2024, the oil extracted and sold totaled US$18 billion. To put that in context, Guyana’s 2025 budget was US$6.6 billion. Thus, distortions in the oil consortium’s financial statements are materially significant for Guyana.