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Govt. aiming to bring all funds for decommissioning into joint account with ExxonM
Kaieteur News- Vice President Bharrat Jagdeo on Thursday said that the decommissioning fund for future oil projects will be managed by both Guyana and ExxonMobil, even as he said the long-term goal of the government is to get the funds previously deducted into the same account.
This was disclosed on Thursday at his weekly press conference while he was responding to a question posed by the Kaieteur News. The reporter asked the chief policymaker in Guyana’s oil and gas sector “How will you ensure that decommissioning cost don’t fall on Guyana and why hasn’t a detailed plan been published to address this most serious issue?”
Vice President Bharrat Jagdeo. (Govt. aiming to bring all funds for decommissioning into joint account with ExxonM)
Jagdeo said while the decommissioning costs can be speculated, he does not want to do that, however he disclosed that in the previous agreement by the APNU administration the monies for decommissioning were being kept by the investors. “So they have been deducting money and keeping it in that account that they said they have,” he said.
He added, “We know what the sums are they and I think that was given some time in the past. I can’t remember what it is now. But what did we do? The same way, we changed the PSA and effectively renegotiated the other contracts outside the Stabroek Block, we passed a new Act, and the act now says, if you have the decommissioning cost, you have to keep it in an account held jointly between the government and the oil and gas companies.”
Jagdeo explained that the last permit government issued, ExxonMobil is now required to deposit the decommissioning cost of the project once it begins, into the account. He said he is hopeful that all of the monies the company had been holding for decommissioning for the current producing projects will be able be added to the account.
“But from the previous project, we’re hoping, over time now, that the law is there, that the next talk we’ll have to have with Exxon… over time, that will happen. But we have, corrected something that APNU screwed up again.”
Back in November last year this newspaper reported Natural Resources Minister, Vickram Bharrat confirming that ExxonMobil will now be required to follow a series of robust decommissioning rules as outlined in the nation’s Petroleum Activities Law. While the new rules only came into effect in August 2024, the minister said they shall apply to all of Exxon’s projects in the Stabroek Block, including those passed prior to the enactment of the legislation. In the oil and gas industry, decommissioning refers to the process of safely dismantling and disposing of offshore and onshore oil and gas facilities once they reach the end of their productive life. This involves cleaning up the site, removing equipment, plugging wells to prevent leaks, and restoring the environment as closely as possible to its original state.
This process is also crucial for minimising harmful environmental impacts, ensuring safety, and complying with regulatory requirements. Decommissioning is also a costly exercise, sometimes demanding billions of US dollars hence countries are often advised to mandate that oil companies set aside money in a fund for this purpose. This fund ensures that the country is not left to carry the burden of handling those costs which ought to be covered by the oil companies.
(Govt. aiming to bring all funds for decommissioning into joint account with ExxonM)
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