EPA renewed Exxon’s Liza 1 Permit despite non-compliance with insurance provisions

Sep 28, 2022 News

Kaieteur News – The Environmental Permit for the Liza Phase One Project explicitly states that Stabroek Block operator, Esso Exploration and Production Guyana Limited (EEPGL) along with its partners, Hess Guyana Exploration Limited and CNOOC Petroleum Guyana Limited must provide evidence that they, as well as their parent companies, would cover all costs associated with the clean-up of an oil spill offshore.

TIGI Head, Frederick Collins

Based on the disclosures of the Environmental Protection Agency (EPA), Guyana has only received insurance coverage from the subsidiaries which stands at US$600M per oil spill event. Discussions are still underway regarding the guarantee to be had from the parent companies.

In light of not being furnished with the evidence that the companies are in compliance with the insurance provisions of their permit, two concerned Guyanese have approached the courts to compel them to do so.

They are also contending that the EPA should not have approved the Liza Phase One Permit until the provisions were fully complied with in their entirety.

The litigants who have filed the case are Frederick Collins and Godfrey Whyte. Their legal team consists of Seenath Jairam, SC, Melinda Janki, Abiola Wong-Inniss. The case was filed on September 13, 2022.

The court is being asked to order the provision of true copies of the following: Evidence that the insurer is authorised to provide the insurance in Guyana, evidence of the authorisation of the institution or parent (insurer) to provide insurance, evidence of the insurer’s financial strength, and evidence that the insurer has a grade A+ rating assigned to it by the Better Business Bureau.

They are also asking for an order to compel the EPA to file a financial undertaking by ExxonMobil Corporation, the parent company of Esso, to provide adequate financial resources to pay or satisfy its subsidiary’s environmental obligations regarding the Stabroek Block. This includes liabilities associated with all costs for clean-up, restoration, and damages caused by the discharge of any contaminant as well as an obligation to compensate all persons affected.

Kaieteur News previously reported that the Liza Phase One Permit was amended and awarded to EEPGL on May 31, 2022.

EPA Head, Kemraj Parsram

It states at Section 14 that the permit holder must, as soon as reasonably practicable, provide from the Parent Company or Affiliate companies of the Permit Holder and its co-venturers one or more legally binding agreements to the agency in which they undertake to provide adequate financial resources to cover any environmental disaster they cause, and to keep indemnified, the agency and the government against all costs.

Collins, the current Head of Transparency International Guyana Inc. (TIGI), told the court that in August, 2022, he read in the Kaieteur newspaper, a letter from former EPA Head, Dr. Vincent Adams that Esso had not provided the insurance required by the permit. Collins said such an assertion was too important to be dismissed hence on August 10, 2022, his lawyers wrote to the EPA’s Head, Mr. Kemraj Parsram, requesting evidence of the undertakings by Esso.

He said those documents were never provided. Further to this, Collins said his lawyers, on August 17, 2022, once again, wrote to Parsram asking for an explanation of the steps taken to enforce the insurance provisions of the permit in their entirety. No response was received, said Collins.

The litigant, who has now sought redress in the courts, argued that any lack of compliance with the requirements for financial assurance would expose the agency and the country by extension. Through his lawyers, the TIGI head urged the courts to provide an urgent hearing of the matter.

This is now the sixth court case challenging Exxon’s operations.