Exxon defends throwing limited insurance coverage to Guyana

Mar 01, 2022 News

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– as it milks multi-billion dollar profits from nation’s oil resources

Kaieteur News – Head of Esso Exploration and Production Guyana Limited (EEPGL), Alistair Routledge, on Monday sought to defend the size of the insurance policy provided by the ExxonMobil subsidiary which has been the Operator of the oil rich Stabroek Block since 1999.

His commentary comes on the heels of an eight-year bashing, particularly from Kaieteur News, on the need for ExxonMobil Corporation, the parent company of EEPGL, to formally agree that it would handle all costs, above and beyond what cannot be met by EEPGL, for an unmitigated oil spill from its operations.
In a statement to the press, Routledge did not confirm or deny that ExxonMobil Corporation, which milks multi-billion dollar profits from Guyana, has a moral and legal obligation to ensure that it protects the environment and the citizens of the countries its subsidiaries operate in.
He did, however, defend the US$2B insurance coverage EEPGL is throwing at Guyana. Routledge is of the view that the size of the policy is in keeping with international industry standards. Routledge assured as well that for every project in Guyana, EEPGL has put in place mitigations and processes that help to prevent adverse events by utilising the best technologies, equipment, and people in our operations. Importantly, EEPGL had made the same claim prior to the Liza Phase One Project coming on stream. When it did, the vessel’s gas compressor was subsequently plagued with a series of mechanical issues which led to over 14 billion standard cubic feet of gas being burnt. This form of environmental pollution has been taking place from December 2019, when oil production started, to now. The company has pledged to have the said issues fixed by mid-year and bring an end to the toxic pollution of the nation’s airspace.
Despite such failings, Routledge is still asking the Guyanese citizenry to trust that the limited liability company he heads is capable of handling all the fiscal implications of an oil spill, should it occur.
Expounding further, he said, “ExxonMobil maintains the industry’s only sustained, dedicated and in-house oil-spill response research programme, which dates back to the 1970s. Here in Guyana, we adhere to an internationally accepted, tiered response system used to determine the requirements of response personnel and equipment.”
The EEPGL head said, “This system remains aligned with the principles of the International Convention on Oil Pollution Preparedness, Response and Cooperation (OPRC), the Caribbean Island Oil Pollution Preparedness Response and Cooperation (OPRC), and the National Oil Spill Response Plan of Guyana to provide an efficient framework to build preparedness and response capabilities matching the oil spill risks from all types of operations.”
Further to this, Routledge sought to address commentary in the local press on “full coverage” insurance and guarantees. He said those comments have inaccurately suggested that ExxonMobil Guyana will not be able to effectively manage response activities.
He was keen to note that insurance is just one source of financial assurance that could be leveraged for response activities while adding, “The value of insurance will not limit the company’s ability to respond to an event, and response activities would certainly not be delayed by discussions with insurers.”
Routledge continued, “We have the financial capacity to meet our responsibilities for an adverse event and we are committed to paying all legitimate costs in the unlikely event of an oil spill.”
Additionally, Routledge boasted of his company’s assets as he noted that up to the end of 2020, EEPGL had almost US$5.0B in assets, which is a primary form of financial assurance. He said citizens should note that this is separate from the assets of the other Stabroek Block co-venturers who also have substantial assets and share any liability for response activities.
In addition, Routledge said EEPGL is working with the Environmental Protection Agency and its co-venturers, Hess Corporation and CNOOC Group, to put in place a combined US$2B of affiliate company guarantees. Routledge stressed that this value exceeds equivalent guarantees required by regulators in Canada, the United States and United Kingdom. The EEPGL head also denied that there was any previous agreement for insurance valuing US$2.5B with a previous EPA administration.
“As stated by ExxonMobil Chairman and CEO Darren Woods at the recent International Energy Conference, ExxonMobil is committed to Guyana for the long term. ExxonMobil Guyana has invested billions of dollars in multiple oil and gas projects here. We are dedicated to avoiding any spill, but should one occur, we are prepared to mitigate and resolve it as quickly and comprehensively as possible,” Routledge concluded.

 

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