Exxon took US$51M from Guyana’s oil profits in 2023 to restore ocean floor in 2039

Jun 10, 2024 ExxonMobil, News, What Guyana needs to know about ExxonMobil

Kaieteur News – ExxonMobil Guyana Limited (EMGL) in 2023 deducted US$51.7 million from Guyana’s oil revenue for its decommissioning activities planned for 2039.

A representation of Exxon’s subsea umbilicals, risers, and flowlines (SURF) equipment used for production activities

Decommissioning refers to clean up and restoration activities, following the life of an oil project. The process involves the safe plugging of wells, removal of the Floating, Production, Storage and Offloading (FPSO) vessel, purging and detachment of risers and removal of the subsea umbilicals, risers, and flowlines (SURF).

Notably, this process will be conducted at the end of each project’s life, which is estimated to be 20 years. Guyana’s first oil project, the Liza One, commenced production activities in 2019. This means that the project is expected to be decommissioned in 2039. Two other projects, the Liza Two and Payara, subsequently came on stream in 2022 and 2023, respectively. As such, those projects will be decommissioned in 2042 and 2043 respectively.

Be that as it may, ExxonMobil is already deducting the country’s oil revenues for the future activities.

According to the company’s financial statement for 2023, a total of GYD$60,647,587,579 or US$288.8M in total has been deducted to date by Exxon for the future decommissioning activities. Presently, the funds are held by the company and will be made available to the country when needed.

Concerns were previously raised by stakeholders regarding Exxon’s control of the decommissioning monies. The government of Guyana has however passed a new Petroleum Activities Law that seeks to, among other things, address fears of the company walking out and leaving Guyana to clean up the environment.

The Law which came into effect in 2023 sets out strict rules for companies to follow on the decommissioning of oil projects. The company would have to submit to the minister for approval, a proposed decommissioning plan and budget no later than two years before the expiration of a petroleum licence or no later than two years before the anticipated end of production.

Once that plan is approved, the minister would instruct that a Decommissioning Fund is created. The company would make contributions to that fund to ensure that when the time for “clean up” arrives, there would be adequate funds to cover the associated expenses. Importantly, the law states that the minister will dictate the terms and conditions of the fund for deposits and disbursements. Government previously made it clear that ExxonMobil will be required to comply with the administrative clauses in the Petroleum Activities legislation.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

clean up, decommissioning, financial statement, restore, sea floor

Latest News