Latest update November 27th, 2024 1:00 AM
Latest News
- ExxonMobil reports ‘record September’ to shareholders as production peaks to 660,000 barrels
- Suriname to deposit royalty from oil to citizens’ bank accounts
- Israel, Hezbollah agree to ceasefire brokered by US and France, to take effect Wednesday
- Fire completely destroys KN, Bhenas Footwear warehouse leaving hundreds of millions in losses
- We must demand a referendum to end this madness.
Oil Minister unable to say how much $$$ Exxon deducting per barrel for clean-up of ocean floor
Kaieteur News – One week after Kaieteur News reported that oil giant and operator of the Stabroek Block ExxonMobil took US$51M from Guyana’s oil profits in 2023 to pay for ocean floor clean-up in 2039, Minister of Natural Resources Vickram Bharat is unable to say how much the oil company is deducting per barrel for the exercise.
Minister of Natural Resources, Vickram Bharrat.
This ‘ocean floor clean-up’ is the decommissioning phase that occurs at the end of the life of an oil project. At a press conference held on Tuesday at the Duke Lodge, the minister was asked by this publication to give a figure of how much money was deducted per barrel by Exxon to go into the decommission fund. Bharrat said that, “There will be a decommissioning fund, and this is in the technical discussion ongoing now so if I give you a figure now. I may be inaccurate because it has to come out of those discussions and the budget and everything that will be presented by Exxon which we will scrutinise and approve before we can pronounce on a figure. So it might be a bit too early to do so.”
Vice President Bharrat Jagdeo was asked last Thursday at his weekly press conference by the Kaieteur News, “Do you have an idea at this time how much the company has been setting aside per barrel for decommissioning?” He said that, “I don’t know the exact figure but you should be able to get that from the ministry” (Ministry of Natural Resources). For last year alone, a whopping $US51M was deducted for such future activities.
Decommissioning activities involve 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 in 20 years’ time. 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. Numerous concerns were raised in regard to Exxon holding on to the funds to facilitate decommissioning, however the government has 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.
Similar Articles
THE BLUNT OF THE DAY
Sports
Features/Columnists
A psychological profile of a control freak
…Peeping Tom Kaieteur News- Imagine an official who believes he’s the last bastion of sanity in a world of incompetence.... more
Rising Gun Crimes in the Caribbean: Urgent Action required by all
By Sir Ronald Sanders Kaieteur News – There is an alarming surge in gun-related violence, particularly among younger... more
Weekend Cartoon
