Exxon boasts of closing 2021 with highest profit in 7 years…But continues to deny Guyana full coverage insurance

Feb 03, 2022 News

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Kaieteur News – During its 2021 fourth quarter earnings call, American oil giant, ExxonMobil proudly disclosed that it made US$23B in profits – its highest posting in seven years. But even as it continues to make billions of dollars in revenue, it continues to deny Guyana, a key asset in its portfolio, its fundamental right to full coverage insurance.

Currently, the Liza Destiny vessel is operating at the Liza Phase One Project in the absence of full coverage insurance.
Next month, Guyana will be starting up its second oil ship called the Liza Unity. It will be producing 220,000 barrels of oil from the Liza Phase Two Project. Despite numerous calls from local and regional actors, neither the PPP/C Government nor ExxonMobil have made any effort to give Guyana full coverage insurance to protect its environs and citizens from the irreversible and devastating effects of a potential oil spill.
In fact, Guyana’s regulator, the Environmental Protection Agency (EPA), quietly made modifications to the Liza Phase Two Project’s Environmental Permit which preserved a provision allowing only ExxonMobil’s limited liability company, Esso Exploration and Production Guyana Limited (EEPGL), to cover costs for any spill or pollution that occurs. This also obtains in the permit for the Payara Project which comes on stream next year.
Vice President, Dr. Bharrat Jagdeo, who has claimed on numerous occasions to have the citizen’s interest at heart, has also failed to demand full coverage insurance from ExxonMobil which the country is entitled to. Instead, he has said the administration is looking to get Exxon to “acknowledge” that it has a commitment to protect the environment. Towards this end, he had said that negotiations are in play for a possible US$2B coverage for Exxon’s fourth project called Yellowtail.
During a press conference that was held last year, the Vice President had 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.”
In noting the rationale for insurance being secured from the parent company, Dr. Jagdeo said, “…this has been a long-standing issue in the private domain and one of the criticisms was that should you have a spill or anything of that nature that there would not be a specific guarantee from the parent company to the local company. So, this is trying to nibble away at all of the issues that we have had problems with.”

WHAT OTHERS ACCEPT
When one examines what other administrations across the world demand from ExxonMobil in the area of insurance, there is a noticeable difference when compared to Guyana.
In Liberia for example, ExxonMobil is not allowed to provide the authorities there with insurance coverage from its subsidiaries. To prevent Exxon from using this loophole, the authorities there have demanded that the company provides insurance coverage without limitation. Such insurance can therefore, only be provided by the parent company and not its subsidiary which has little to no revenue.
The clause in one of the Production Sharing Agreements Exxon is tied to in Liberia says, “The Contractor shall take out and cause to be taken out by its contractors and subcontractors, in respect of the Petroleum Operations, all insurances of the type and for such amounts customarily carried in accordance with Good International Petroleum Industry Practice, including without limitation, third party liability insurance and insurances to cover damage to property, facilities, equipment and materials, without prejudice to such insurances, which would be required under Law.”
Importantly, Liberia makes it categorically clear that evidence of full coverage insurance by Exxon, its partners and subcontractors, have to be provided “before Petroleum Operations begin and thereafter at least annually.”
Closer to home, Guyana’s South American sister, Peru, also displays a no-nonsense approach in dealing with oil companies. On Monday, Kaieteur News reported that a judge in Peru barred four Executives from Spanish oil company, Repsol, from leaving the country amid a devastating oil spill, which saw more than 6,000 barrels of crude contaminating the shores of Peru. Repsol could face liabilities of up to US$500 million for compensation for the effects of the spill.
While Peru continues to take action to protect its people and its environment, Guyana in contrast, continues to give Exxon the permission to pollute the airspace without consequence and to operate without insurance at break neck speed.

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