Latest update March 27th, 2026 12:40 AM
Exxon and partners continue to deduct US-millions to cleanup oil projects yet to startup
(Kaieteur News) – Although decommissioning of a project does not occur until after production ceases, the Stabroek Block partners have been deducting millions of US-dollars, which it still controls, for developments that are still to come on stream.
This was revealed in CNOOC’s 2024 Annual Report, seen by this newspaper. The company holds a 25% working interest in the Stabroek Block, alongside Hess Guyana Exploration Limited (now Chevron) with 30% and ExxonMobil Guyana, the operator with 45%.
CNOOC reported, “During the period ended December 31, 2024, additions to decommissioning and restoration provisions include the cost for two new development wells in Liza Phase 2, seven new development wells in Payara, thirteen new development wells in Yellowtail and ten new development wells in Uara and 3 new development wells in Whiptail that spud during the year.”
Decommissioning in the oil and gas sector refers to the safe removal of production equipment and restoration of the seafloor. It includes plugging wells, removal of flowlines and other related activities.
In Guyana’s case, each project has an estimated lifespan of 20 years. Therefore, decommissioning is not expected to take place anytime soon for at least three of the projects that the companies have already started deducting decommissioning costs for.
The Yellowtail project only commenced oil production in August of 2025. Be that as it may, Exxon and partners reduced Guyana’s share of profits to pay for decommissioning the project, which is scheduled to take place in 2045, according to project documents.
Additionally, the companies also took monies to decommission two other projects which have not yet started production- the fifth and sixth developments, Uaru and Whiptail, respectively.
According to the financial statements seen by Kaieteur News, the companies each pocketed decommissioning monies. Exxon reported a decommissioning cost of $9.8B, Hess $3B and CNOOC $30M.
This amounts to over GY$12.B or just over US$64.3M. It should be noted that the oil companies have been engaging in this practice for years as Kaieteur News previously reported on this issue.
When asked to address this state of affairs during his weekly press conference in July 2024, Vice President, Bharrat Jagdeo, the key policymaker for the petroleum sector refused to comment, since according to him, “I think it is not accurate.”
He however pointed out, “but if the project hasn’t started as yet, my assumption is that you can’t deduct from it for decommissioning if it hasn’t even been commissioned as yet.”
Jagdeo was clear that oil companies should not be deducting costs to decommission a project if it has not yet been commissioned.
Presently, Exxon and partners control all of the monies deducted for decommissioning. Earlier this year, VP Jagdeo revealed that efforts are being made to allow Guyana to have joint control of the decommissioning account to allow for greater transparency and accountability of the fund.
Just last month, Natural Resources Minister, Vickram Bharrat told this publication that Guyana still does not have control of the resources. He explained, “We have a consultant that is working on that right now for us; the same consultant that has been working with us all the time, S&P Global. They are working with us on putting that together so we’ll have more information once we get that.”
He declined to answer further questions as he shuffled off to another event.
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