Leaked Study Shows Exxon, Partners Overspent by $138 Billion

[marmar]

(Bloomberg) Oil and natural gas projects that Exxon Mobil Corp. invested in between 1998 and 2017 ended up costing $138 billion more than early-stage estimates, potentially due to mismanagement by operators and poor planning, according to an internal analysis seen by Bloomberg.

The 2020 study, reviewing 110 projects in which Exxon took a stake over two decades, suggested two theories for the overspend: the sheer complexity of large-scale developments and “human biases” that resulted in “overoptimistic” plans designed to win approval from senior executives for funding. Twenty-one of the projects accounted for 93% of the overspend, according to the analysis. The worst ended up costing more than six times an early estimate.

The $138 billion overspend is a gross figure that includes partners’ stakes in the projects, meaning Exxon didn’t shoulder the excessive costs alone. Exxon spokesperson Matt Furman said that the so-called Gate 2 early-stage estimates used as a comparison in the study were “rough sketches” and that the company’s share of the costs above the more important “Gate 3” final investment decision amounted to $20 billion during the period. Of that total, only $6 billion was attributable to projects that Exxon actually operated, representing a margin of error of just 1.5% compared with the total capital invested, he said.

The entire energy industry suffered large cost overruns during the 2010s, made worse by the 2014 oil price crash, one of the worst in the history of the crude market. The Kashagan project in Kazakhstan, funded by a group of major oil companies including Exxon, went considerably over budget. Gorgon, a massive Australian gas operation run by Chevron Corp. and in which Exxon has a minority stake, also saw costs spiral. Other examples abound. ..........(more)

https://www.bloomberg.com/news/articles/2022-09-23/leaked-study-says-exxon-partners-overspent-by-138-billion-on-oil-gas-projects?srnd=premium&leadSource=uverify%20wall

[dweller]

1. They'll just make up the loss

from us at the pumps …



✌🏻

[Cracklin Charlie]

2. Ah. That's why they showed up in Kevin's new plan for America.

They want some sweet subsidies to make up for their mismanagement and poor planning losses.

Kevin’s plan should be called “I want to Swindle America, and Steal your Money”.