Lack of full coverage insurance exposes Guyana to bankruptcy—Patterson

Feb 04, 2022 News

By Gary Eleazar
Kaieteur News- The fact that t

Minister, David Patterson

here are oil exploration and production activities underway in Guyana’s Exclusive Economic Zone in the Stabroek and Other Blocks, the issue of binding full coverage insurance provided by the parent companies of the oil operators has for several years now been a sore point among stakeholders.

Vice President Bharrat Jagdeo, had recently in lamenting the state of affairs, said government was looking to have the parent companies acknowledge responsibility for up to US$2B in the event of a catastrophic event such as an oil spill. The matter was again raised yesterday. This time as the Minister and Shadow Minister with responsibility for the Natural Resources Sector, Vickram Bharrat and David Patterson respectively, clashed on day four of the Budget Debate of the Estimated National Expenditure for this year.

The Alliance for Change (AFC) General Secretary and Member of Parliament (MP), Patterson, in his presentation to the debates, was unrelenting in his criticism of the state of affairs.
According to Patterson, on assumption of office, the People’s Progressive Party Civic (PPP/C) administration reversed the position that Guyana should be financially covered for any and all spills, to little or no coverage at all. “When they reversed the Agreement between the Coalition and Exxon for the company to obtain the maximum insurance coverage on the market with the remainder being covered by the three parent companies.”

According to Patterson, the limited insurance coverage, as against full or unlimited liability coverage “against all risks poses a most severe risk to Guyana, leaving us vulnerable to financial bankruptcy without the means to cleanup any oil spill. Not to mention the nation’s exposure to lawsuits from bordering countries.” To this end, he used the occasion to remind of the BP oil spill in the Gulf of Mexico, which costed approximately US$70 billion, “and the environmental damage persists.” Patterson posited: “it is rather stunning that with the proposed increase in production, the government is now talking about having Exxon obtain insurance to the value of $2 Billion.”

Such a position Patterson said, begs the question, “Did Exxon cancel the $2.5 Billion in private insurance that was put in place under the Coalition? Why would the government feel satisfied with only $2 Billion worth of liability coverage, when the BP spill in the Gulf of Mexico costed more than $70 Billion?”

Additionally he queried, “…if the government is satisfied with only the $2 Billion coverage, how would any costs over and above that be covered?”
Addressing another environmental issue emanating as a result of the oil operations offshore Guyana relates to the Flaring by ExxonMobil from the Liza Destiny, Floating Production Storage Production and Offloading Vessel. To this end, he was adamant the law of the land is very clear when it comes to flaring. “First, Clause 3.6 of the EPA (Environmental Protection Agency) Permits expressly prohibits flaring, with exceptions being made for flaring only during startup of the FPSO, emergencies, or periods of maintenance.”
He reminded that the unexpected failure of Exxon’s equipment at the beginning of operations prompted the Coalition government to take actions to stop such flaring, including severely reducing oil production, and revisions of the EPA Permits to ensure compliance with the law.
According to Patterson, on assumption of Office, “the PPP/C callously reversed the Zero Flaring Mandate.”

He contends that with this reversal, the PPP/C now gives Exxon the licence to flare any amount if they pay a fee of $45 USD per Tonne of carbon dioxide flared.
According to Patterson, “the PPP/C’s declaration that the fine of $45 USD per tonne of carbon dioxide equivalent emitted, is an improvement, is nothing but a laughable sham, giving Exxon the licence to flare. Money talks, the environment suffers!!”
He noted too that what is most worrying was the recent statement by Exxon that it still has not fixed the flaring problem which has been ongoing since the start of operations more than two years ago. “The government has total disregard for the nation’s health, safety and the environment, which was made clear when government ministers continued parroting Exxon’s position that Guyana is a carbon sink, so it has the capacity to take in more pollutants—this coming from a government that is also pushing a green agenda.”

Addressing another Environmental concern, Patterson also used his Budget Presentation to raise the matter of the dumping of produced/waste water into the Atlantic Ocean.
To this end, he informed the House that much like the issue of flaring, “…the PPP/C upon taking office, immediately reversed the coalition’s zero dumping of produced water mandate developed.” He told the House the original mandate was consistent with the World Bank’s international standards that require reinjection, and not the dumping of this water, which is three times hotter than the ocean and contains oil, radioactive elements, mercury, lead, arsenic, and many other toxic chemicals.

“There is now a serious question surrounding the cause of the drop in fishing quantities offshore Guyana as it relates to this dumping of produced water.”
According to Patterson, “no one with any inkling of common sense would think that throwing all of those billions of gallons of hot, radioactive and toxic water into our clean oceans would not impact our fish life, and more egregious is the Government’s nonchalant attitude towards a study that could find out what the impact is.” He was adamant that the current administration’s approach to the industry emphasizes that it is “more interested in prioritising monetary gains over protection of the environment, safety and health, which is an unnecessary and dangerous choice, since today’s technology makes it commonplace for both environmental protection and monetary gains to be achieved at the same time, especially considering that Exxon is comfortably and willingly achieving these targets in other countries such as the United States.”