Decommissioning costs

Jul 11, 2024 Editorial

Kaieteur News – ExxonMobil must be recognized for its swiftness of hands with extracting decommissioning costs from Guyana for projects not yet operational. As quick as a pickpocket, US$177M is gone from Guyana’s oil monies and to the control of ExxonMobil. Given the sum involved for 2023 alone, to describe what the company and partners have executed with precision and skill as the work of a good pickpocket does not capture the essence of ExxonMobil’s planning, executing. The haul of US$177M for decommissioning costs for a project still to stir into life matches the handiwork of a bank robber.

When this US$177M extraction was first asked of Guyana’s chief oil spokesman, Vice President Bharrat Jagdeo, he was disbelieving: “I think it is not accurate.” He quickly caught himself, though “if the project hasn’t started as yet, then my assumption is that you can’t deduct from it for decommissioning if it hasn’t been decommissioned as yet.” There was nothing to defend or conceal there, so Jagdeo had no choice but to say what he said. When will Jagdeo be true to his responsibilities to Guyana and callout ExxonMobil for the kind of partner that it is to this country. One unworthy of trust, nor could be considered reliable when millions are involved, a corporate giant that is a gouger without equal.

The US$177M should be held by Guyana in an escrow account and earn interest. Even at a meager 5% interest rate, the income would be US$8.85M annually, or close to two billion Guyana dollars. These are the issues that this nation’s chief oil policymaker should be raising hell about. However, he is not going near anything that would upset the people of this schemer of an oil partner that Guyana has. ExxonMobil is taking out millions upon millions for decommissioning costs far into the future, reducing Guyanese profit share, and earning interest from Guyanese money taken out in advance. ExxonMobil could be earning interest for its treasury from Guyana’s decommissioning money lent or invested in other places within its global portfolio. Or the American oil whale could be using its Guyana’s decommissioning deductions as part of its ongoing investment billions in Guyana. Guyana pays interest to ExxonMobil on the upfront oil investments it makes here, which is really Guyana’s money recycled to those offshore oil projects. In addition to interest earnings, there is still the cream: those handsome returns from invested capital for ExxonMobil and its consortium operating in Guyana’s oil fields. There is a neatness to that smooth operator practice. Considering all this, a reasonable conclusion could be that Guyana has more than a corporate partner of a special kind by its side. Guyana is forced to deal with a corporate con artist of rare prowess.

Meanwhile, Jagdeo still felt that he had to run some more interference for ExxonMobil. The decommissioning costs taken by ExxonMobil are to cap the wells until oil production starts was his rationale. By now, Guyana’s oil czar must know that decommissioning occurs only when an oil project is done, viz., when oil production at a specific project is exhausted. This is what Guyana’s most knowledgeable oilman, Dr. Vincent Adams, the former local EPA head, sharply asserted in direct contradiction of what Jagdeo came up with to explain ExxonMobil’s early decommissioning deductions. It is “asinine to say you are decommissioning a well before you start producing from it.” Even to those who know little about oil that makes perfect sense. Regarding why Guyana’s oil chief felt that he had to open his mouth and put his foot into it is something that we are still trying to figure out. Is Jagdeo now so committed to ExxonMobil’s sleights of hand that he has lost sight of where his duty to Guyana begins? Or we ask, is it that he is so deeply embedded in ExxonMobil’s bed that he just doesn’t care anymore?

The beginning and end of decommissioning costs is that such should be held by the host nation. Even the 55-member Commonwealth Group had come out very strongly in support of such action. Guyana (Jagdeo) is not listening, waves his hand at such recommendations. It is the green light for ExxonMobil to keep on practicing its decommissioning shenanigans.

Bharrat Jagdeo, Editorial, ExxonMobil, Guyana, Vice President

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Decommissioning costs

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Decommissioning costs

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