Suriname accepts insurance for oil spills only from parent companies –former Staatsolie Boss

Dec 22, 2021 News

Kaieteur News – While Suriname still has a few years to go before offshore oil production commences, it has outlined a suite of high standards for all oil companies to follow. One such principle applies to insurance for oil spills. The Dutch speaking nation has made it a practice to only accept full coverage insurance from the parent companies operating in its backyard.
Confirming as well as elucidating this industry requirement recently was former head of Staatsolie (Suriname’s National Oil Company), Mr. Rudolf Elias.

Former Head of Staatsolie, Rudolf Elias

During an interview on Kaieteur Radio’s programme, Guyana’s Oil and You, Elias noted that all the companies operating in its basin are very well prepared to handle the possibility of an oil spill, not just during the oil production stage, but in exploration as well.
Elias said Suriname, and the entire oil industry, by extension, understands the importance of being well prepared, especially when one recalls the lessons of the tragic Deepwater Horizon oil spill, which occurred in April 2010 in the Gulf of Mexico on the BP-operated Macondo Prospect.
Kaieteur News previously reported that the Deepwater Horizon incident is considered to be the largest marine oil spill in the history of the petroleum industry, costing the lives of 11 men. The industrial disaster also resulted in over 4 million barrels of crude oil being spilled into the Gulf of Mexico, which disrupted an entire region’s economy, damaged fisheries and critical habitats, and brought vividly to light, the risks of deepwater drilling for oil and gas.
Elias said, therefore, “…Even if it is the daughter of the daughter of the daughter of the daughter, in the end, the parent company will have to take full responsibility…So it is always good to have the mother company be the guarantor for an event of an oil spill.”
He added, “But the oil companies are so well organized in Suriname that within moments there will be a lot of companies from Trinidad and from Houston that will be able to go to such an eventuality immediately in order to contain the spill. So I do believe that oil companies, especially the IOCs (International Oil Companies) like Exxon and whereas with Total and Apache are so responsible that if there is an oil spill they will catch it up pretty quickly.”
While Suriname has made it a nonnegotiable position to have parent companies provide insurance, in Guyana, the circumstances are vastly different.
ExxonMobil Corporation, the parent company of Esso Exploration and Production Guyana Limited (EEPGL) has steered clear of being tied to full coverage insurance for its Stabroek Block projects, which are certain to deliver multibillion dollar profits on an annual basis. Instead, it has only placed its subsidiary, (EEPGL), which has little assets, on the hook if such an eventuality occurs offshore. This is the state of affairs with its Liza Phase One, Liza Phase Two and Payara Projects.
As for its Yellowtail Project, which is projected to cost over US$9B, Vice President and local oil czar, Dr. Bharrat Jagdeo is on record saying that the government is trying to get ExxonMobil to acknowledge its obligation for insurance.
During his press conference in November, last, the Vice President specifically said, “As you know, we are constantly seeking to improve the permits and …in the one we are looking at in the Yellowtail Project, we are looking for a generic position where the parent company, ExxonMobil, will now guarantee; well we are looking at maybe up to US$2B for any damage caused here… because from the beginning there was no parent guarantee, it was implicit but…that is crucial for us as we move forward.”