Whitehouse, Van Hollen, Merkley Probe ExxonMobil’s Guyana Offshore Oil Contract and the Company’s U.S. Tax Liability

ExxonMobil may have used American taxpayer funds to subsidize its foreign oil production, which it does in partnership with a Chinese state-owned company

Washington, DC - U.S. Senators Sheldon Whitehouse (D-RI), Chris Van Hollen (D-MD), and Jeff Merkley (D-OR) sent a letter today to ExxonMobil CEO Darren Woods asking for information on the company's accounting of its U.S. tax liability as a result of the 2016 Stabroek Block Petroleum Agreement. The letter raises questions about whether American taxpayers are subsidizing ExxonMobil's foreign oil production in Guyana, which the company carries out in partnership with a Chinese state-owned company.

Current U.S. tax rules offer a loophole for big multinational oil companies drilling in a foreign country to shrink their tax bills. Closing this loophole would save American taxpayers an estimated $71.5 billion over ten years.

"We are concerned about the possibility that American taxpayers may be subsidizing ExxonMobil's foreign oil production, which they do in partnership with a Chinese state-owned company," wrote Whitehouse, Van Hollen, and Merkley.

"Payments to a foreign government in exchange for an economic benefit [such as the right to extract oil and gas] are not considered taxes at all and thus cannot qualify for a U.S. foreign tax credit. 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,"added the senators.

According to a 2021 IMF report, U.S. effectively subsidizes Big Oil and the fossil fuel industry to over $600 billion annually. Congressional Republicans added even more subsidies with their Beautiful-for-Billionaires bill, which included a $167 billion tax giveaway to companies like ExxonMobil that ship jobs and profits overseas. In February, Whitehouse and Rep. Lloyd Doggett (D-TX) reintroduced the No Tax Breaks for Outsourcing Act which would reverse the special tax rate for offshore profits that's half the domestic rate.

Congressional Republicans also included a special $427 million carveout for the oil and gas industry to shirk the Corporate Alternative Minimum tax that Democrats included in the Inflation Reduction Act to prevent companies from lowering their liability by abusing tax loopholes. Whitehouse and other Senate Democrats sent a letter in early September to Treasury Secretary Scott Bessent slamming Treasury's decision to create new loopholes in the corporate alternative minimum tax for the largest and wealthiest corporations.

The text of the letter is below and a PDF of the letter is available here.

September 23, 2025

Mr. Darren Woods

Chairman and Chief Executive Officer

ExxonMobil

22777 Springwoods Village Parkway
Spring, TX 77389

Dear Mr. Woods:

We write to you regarding how ExxonMobil's payments to the Government of Guyana, governed by the 2016 Stabroek Block Petroleum Agreement (PA), have affected your company's U.S. federal tax liability. As you know, after ExxonMobil discovered nearly 11 billion barrels of oil off the coast Guyana, your company signed a PA with the Government of Guyana. 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. ExxonMobil partnered with a Chinese state-owned oil company-the China National Offshore Oil Corporation (CNOOC)-and 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.

The PA, which was only made public after significant public pressure on the Government of Guyana, stipulates that ExxonMobil can pocket 75 percent of the value of oil produced and sold until it has recouped its recoverable contract costs. The remaining 25 percent 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.

We are concerned about the possibility that American taxpayers may be subsidizing ExxonMobil's foreign oil production, which they do in partnership with a Chinese state-owned company. Under Reg. 1.901-2(a)(ii)(B), 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 extractoil 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.

A 2024 Treasury Department proposal would have closed this loophole by limiting the portion of a payment that would qualify for a U.S. 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 $71.5 billion over ten years.

Big oil companies like ExxonMobil do not need any more government subsidies. According to a 2021 IMF report, U.S. effective subsidies to the fossil fuel industry are over $600 billion annually. Republicans added even more with their "One Big Beautiful Bill Act," which included a $167 billion handout to companies like ExxonMobil that ship jobs and profits overseas, as well as a special $427 million carveout for the oil and gas industry to limit oravoid the Corporate Alternative Minimum taxthat 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 subsidizing your partnership with China to drill for oil overseas. We ask that you answer the following questions about howthe 2016 PA with the Government of Guyana has affected ExxonMobil's U.S. federal tax liability by no later than October 23, 2025:

1. Based on Article 15.4 of the PA, did ExxonMobil provide income tax returns to the Government of Guyana, and for which years? Did ExxonMobil 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?
2. For any income tax payments to Guyana made by ExxonMobil or on its behalf, what portion, if any, did ExxonMobil claim as U.S. FTCs in 2024 and/or 2023?
3. Did ExxonMobil claim any U.S. FTCs on any payments to the Government of Guyana in 2024 and/or 2023?
4. If ExxonMobil claimed any U.S. FTCs in 2024 and/or 2023 on payments to the Government of Guyana, please explain what provisions of the U.S. Internal Revenue Code or regulations the company used to justify the claim and provide a model of how the calculation of creditable tax was made using illustrative numbers that are consistent with actual results.
5. If U.S. FTCs were claimed on any payments to the Government of Guyana, how much did they lower the company's U.S. federal tax bill for 2024 and/or 2023?
6. Does the 2016 PA between ExxonMobil and Guyana make a distinction between taxes owed to the Government of Guyana and payments for economic benefits?
   1. If so, please provide the specific language and ExxonMobil's interpretation of how it affects your U.S. federal tax liability under current rules.
7. What was ExxonMobil's rationale for including CNOOC as a partner in its 2016 PA with the Government of Guyana?