Three United States legislators have written to the oil and gas giant, ExxonMobil, on how its payments to the Guyana government regarding the 2016 Stabroek Block Petroleum Agreement (PA), have affected its US federal tax liability.
“Does the 2016 PA between ExxonMobil and Guyana make a distinction between taxes owed to the Government of Guyana and payments for economic benefits? If so, please provide the specific language and ExxonMobil’s interpretation of how it affects your U.S. federal tax liability under current rules,” the three Democratic legislators wrote in their September 23, 2025 letter to ExxonMobil’s chairman and chief executive officer, Darren Woods.
In their lengthy correspondence, Sheldon Whitehouse of Rhode Island, Chris Van Hollen of Maryland and Jeff Merkley, of Oregon, said that after ExxonMobil discovered nearly 11 billion barrels of oil off the coast Guyana, the company signed a PA with the Guyana government.
“Since the initial Liza oil discovery in 2015, 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.”
The letter noted that ExxonMobil partnered with a Chinese state-owned oil company, the China National Offshore Oil Corporation (CNOOC), and the US company Hess, now owned by Chevron, which together pump around 900,000 barrels of oil a day.
“Guyana now has the world’s highest expected oil production growth through 2035, despite elevated sea levels and other harms to forest ecosystems and local communities,” they wrote, saying that the PA, which was only made public after significant public pressure on the Guyana government “stipulates that ExxonMobil can pocket 75 per cent of the value of oil produced and sold until it has recouped its recoverable contract costs.
“The remaining 25 per cent of production is split between ExxonMobil and its partners and the Government of Guyana. Under Article 15.4 of the PA, the Government of Guyana pays ExxonMobil’s Guyana income taxes out of the Government’s share of the oil profits.”
The three Senators say they are concerned about the possibility that “American taxpayers may be subsidising ExxonMobil’s foreign oil production, which they do in partnership with a Chinese state-owned company”.
They said that under existing US laws, ExxonMobil is considered a “dual capacity” taxpayer, as it is a multinational company that pays an income tax to a foreign country while also receiving a specific economic benefit from that foreign country, such as the right to extract oil and gas.
“In addition, the rules prohibiting U.S. companies from claiming foreign tax credits (FTCs) to lower their U.S. tax bill for payments that amount to subsidies from the foreign government should apply. ExxonMobil may not be entitled to shrink its U.S. tax bill through any FTCs for payments made by the Government of Guyana for its taxes.
“Further, payments to a foreign government in exchange for an economic benefit are not considered taxes at all and thus cannot qualify for a U.S. foreign tax credit (FTC). However special rules allow “dual capacity” taxpayers to divide up such payments into creditable taxes and non-creditable payments.
“While it is not difficult to distinguish between taxes and payments for economic benefits, current rules allow contracts to be structured in a way that blurs the distinction. This loophole is a particular boon to big multinational oil companies.”
The three Democrats wrote that a 2024 Treasury Department proposal would have closed this loophole by limiting the portion of a payment that would qualify for a US FTC to the equivalent amount of tax that the dual capacity taxpayer would have owed the foreign government if it was a non-dual capacity taxpayer.
“In other words, it would prevent a company like ExxonMobil from shrinking its U.S. tax bill by claiming a larger U.S. FTC than any other company operating in the country that was not paying for the right to drill on land owned by Guyana. Closing this loophole would save U.S. taxpayers an estimated US$71.5 billion over ten years.”
The legislators wrote that big oil companies like ExxonMobil do not need any more government subsidies.
They said according to a 2021 International Monetary Fund (IMF) report, US effective subsidies to the fossil fuel industry are over US$600 billion annually.
They said that the Republicans have added even more with their “One Big Beautiful Bill Act,” which included a US$167 billion handout to companies like ExxonMobil that ship jobs and profits overseas, as well as a special US$427 million carveout for the oil and gas industry to limit or avoid the Corporate Alternative Minimum tax that is intended to prevent companies from erasing their tax bill with special breaks.
“We would like to better understand whether U.S. tax dollars are subsidising your partnership with China to drill for oil overseas,” they wrote, submitting seven questions for answers regarding “how the 2016 PA with the Government of Guyana has affected ExxonMobil’s U.S. federal tax liability by no later than October 23, 2025”.
Among the questions is whether ExxonMobil provide income tax returns to the Guyana government and for which years and did the oil giant “directly pay the Government of Guyana any income tax in 2024 and/or 2023, or did the Government of Guyana make such payments on ExxonMobil’s behalf out of the government’s share of profit oil?”
WASHINGTON, Sept 24, CMC -
CMC/gt/ir/2025
