ExxonMobil will be made to stand cost for any oil spill - Energy Dept. Head

ExxonMobil will be made to stand cost for any oil spill – Energy Dept. Head

Feb 18, 2019 News

By Kiana Wilburg

“Oil spills are to be handled by the main contractor which is Exxon.
They are the operator and they will have to adhere to the Environmental Act and they will be on the hook for the cost for any oil spill…” -Dr. Mark Bynoe

Should there be an oil spill in the Stabroek Block, ExxonMobil will have to stand the cost for it, says Energy Department Head, Dr. Mark Bynoe.
He was at the time, responding to questions from Kaieteur News on the financial wherewithal of ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), to cover an eventuality such as an oil spill.
Dr. Bynoe said, “First of all, oil spills are to be handled by the main contractor which is Exxon.
They are the operator and they will have to adhere to the Environmental Act and they will be on the hook for the cost for any oil spill.”
Kaieteur News then reminded that Guyana signed its contract with Exxon’s subsidiary, the very company which is being tied to all environmental documents for the Stabroek Block. To this Dr. Bynoe said, “Well I am not aware of that.”

Energy Department Head, Dr. Mark Bynoe

While the Energy Department Head holds the view about ExxonMobil, Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams, told this newspaper that he is not convinced that ExxonMobil’s subsidiary has the financial means to cover the possibility of an oil spill in the Stabroek Block.
He told Kaieteur News this factor is a major issue which must be addressed before the operator gets its permit for the Liza Phase Two Project.
Dr. Adams had said, “The big issue is covering liability if there is a spill…And I have to be comfortable that they are properly covered by insurance. I made the statement before that this has to be addressed and that is what we are working through right now…”
The EPA Head then stressed that the company being held liable for spills via a contract with Guyana is EEPGL and not its parent company, ExxonMobil which is worth over US$250B. “EEPGL doesn’t have any assets,” Dr. Adams added.
Kaieteur News then asked the EPA Head if the Agency has any document from ExxonMobil which states that it will cover the costs for any spill that is caused by its subsidiary. Dr. Adams answered in the negative.
Dr. Adams said, “EEPGL is a limited liability corporation. It is a new corporation formed for this project and they have zero assets. There is nothing in any documentation about ExxonMobil (handling oil spill costs) and that is the big problem…”
He added, “If something happens and EEPGL doesn’t have the assets to take care of it, all they probably got to do is declare bankruptcy and Exxon is not liable unless it is written someplace and that is why insurance is so important.”
Kaieteur News then reminded that this predicament also taints the first permit granted to EEPGL for Liza Phase One. Dr. Adams acknowledge that this is indeed so. However, he is engaging legal advice on the matter. He said, “I was talking with legal experts about how we can retract it and fix it. I was not there for Liza One. So I am considering retracting it and fixing it.”
This publication also contacted EEPGL’s Senior Director of Public and Government Affairs, Deedra Moe on the matter yesterday afternoon via email. Moe was asked to say if the EPA has brought to her company’s attention, the issues it has about liability for an oil spill being with EEPGL instead of ExxonMobil. Moe said, “We continue to work with the EPA on the Liza Phase Two permit. We have and will continue to address any questions as the permit progresses through the process.”
When Kaieteur News asked if EEPGL has enough assets to cover a spill, Moe did not confirm or deny, much less give any specifics about her company’s assets in this regard. Her only response was, “We are committed to safe and environmentally responsible operations. Leveraging our industry leading expertise and safety systems, we make prevention of any such oil spill our first priority.”
The Senior Director was also asked to say if ExxonMobil offered the government any formal assurance which states that should its subsidiary, EEPGL, be unable to cover the cost of an oil spill; Exxon would pick up the bill. All Moe would say on this front is, “We have the technical, operational and financial capability to respond to any scenario.”
DEMAND GUARANTEES
Governments of oil producing nations should always examine the assets of subsidiary companies signing onto an oil deal with them. It could mean the difference between having full coverage from the company for accidents and a country having to deal with the expense on its own.
Considering this, the International Monetary Fund (IMF) and transparency body, Revenue Watch, have urged in numerous literatures that the choice of parties to any agreement should be treated with extreme caution. In this regard, the Revenue Watch for example has often warned of the ticks of oil companies when it comes to signing agreements.
The transparency body said, “Oil company partners in any deal with a host government will usually create a subsidiary to serve as party to the agreement. But this type of subsidiary will have limited or no assets of its own and it will not be able to rely on the financial resources of the parent company to stand behind its commitments, especially in regard to damages resulting from environmental pollution.”
Revenue Watch and the IMF have said therefore, that it is expected of host governments to “require a guarantee from the ultimate parent company of the subsidiary so that the host government has a reliable contractual counterparty with the resources to cover all potential liabilities.”