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ExxonMobil and Stabroek Block partners currently control $60B clean-up fund- Routledge
President, ExxonMobil Guyana Limited, Alistair Routledge (ExxonMobil and Stabroek Block partners currently control $60B clean-up fund- Routledge)
Kaieteur News – ExxonMobil Guyana Limited (EMGL), the operator of the oil-rich Stabroek Block and its Co-Venturers, Hess Guyana Exploration Ltd and CNOOC Petroleum Guyana Limited have deducted just over $60B to date for decommissioning activities.
The monies have been set aside in a fund which is controlled by the partners according to President and Country Manager of EMGL, Alistair Routledge.
During the company’s third quarter media conference last Wednesday at Duke Street, Kingston, Georgetown, Routledge explained that at the end of 2023, $60B was deducted for decommissioning activities.
Decommissioning refers to the clean-up and restoration of the environment, following oil and gas activities. It includes the safe disconnection of flowlines, plugging of wells and removal of the related infrastructure.
In an invited comment, he told reporters, “To date, or at least year end 2023, $60B has been set aside on a cumulative basis for ultimately for decommissioning (and) site restoration. Currently, those funds are held independently by the three Stabroek Block Co-Venturers.”
Concerns were previously raised by stakeholders regarding the oil companies being in control of the country’s decommissioning fund since petroleum companies have walked away from countries, dodging this key and costly exercise.
Countries are then saddled with the bill to restore the environment after the companies swallowed up profits and disappear when it is time to decommission the projects.
ExxonMobil currently has six sanctioned developments in the Stabroek Block.
Guyana’s Parliament in 2023 approved the Petroleum Activities Act, repealing the outdated Petroleum (Exploration and Production) Act 1986. With regard to decommissioning, the Act now mandates that terms and conditions for governance of the fund and disbursement of payments shall be determined by the Minister and licensee.
Prior to the passage of the legislation, the fund was strictly managed by the oil companies.
Routledge said Exxon is fully aware that government would like to establish a separate decommissioning fund to ensure the money is available when needed, and for the intent that they were set aside.
To this end, he noted, “We will be happy to work with the government on the establishing of those; what are the rules; ensuring that all the international best practices are applied to give that surety to people that indeed the funds are available when needed.”
He said the money set aside so far is for projects in production. Presently, Liza One, Liza Two and Payara are producing approximately 645,000 barrels per day in the Stabroek Block.
Meanwhile, in explaining how the decommissioning fund is calculated, Exxon’s Country Manager said, “The way the funds are accumulated is on a unit basis, based on production- so we take the estimated decommissioning cost which is always a moving target- based on technology and the latest expectations when that will happen, cost in the market and then its divided by the remaining amount of oil to be produced and then becomes a unit of production amount that is set aside.”
He added that decommissioning funds are generally established in an independent manner since countries too can end up mismanaging the fund.
“So generally, what happens with these funds is they are set up in some independent way because one of the things that we have seen in some countries is sometimes the funds are pulled early for other purposes, so for the security of the nation to know the funds are available you want to set it up independently with government oversight of course but ensuring that it’s in a secure place and its invested wisely in a low risk but gaining some form of return,” Routledge explained.
(ExxonMobil and Stabroek Block partners currently control $60B clean-up fund- Routledge)
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