ExxonMobil Guyana Limited’s (EMGL) President, Alistair Routledge, revealed today that by the end of 2023, the company had set aside GYD$60 billion on an accumulative basis for decommissioning and site restoration efforts.
Decommissioning is a process that involves the safe removal of subsea infrastructure which is used for oil production.
During Exxon’s press conference, Routledge made the disclosure that the $60 billion is currently being held by the Stabroek Block co-ventures – Exxon, Hess and CNOOC. It should be noted that in accordance with the 2016 Stabroek Block Production Sharing Agreement (PSA), Exxon and its partners are allowed to recover the costs before it is ready to be spent.
In his explanation, Routledge stated that the decommissioning funds are based on a unit production system, where costs are calculated by dividing the estimated decommissioning expenses by the remaining oil to be produced. He noted that the process is continually updated based on technological advancements and market conditions.
“Generally, what happens with these funds is that they are set up in an independent way because one of the things we have seen in some countries is that sometimes, the funds are pulled early for other purposes,” he noted.
EMGL’s President continued, “So for the security of the nation to know that the funds are available, you want to set it up independently with government oversight of course.” He added that secure management and low-risk investment of the funds would ensure they are available when needed, while still generating returns.
During the press conference, Routledge also acknowledged that under the Petroleum Activities Act of 2023, the Government of Guyana (GoG) plans to establish an independent decommissioning fund. He noted that this would be separate from the one controlled by the oil companies.
He said, “That would be separate in order to have those funds kept independently, in order to have the confidence that the funds will be available when needed and for the intent they were set aside.”
To this end, Routledge expressed ExxonMobil’s willingness to collaborate with the government on setting up the fund and establishing rules that follow international best practices.
