US$2B grossly insufficient to cover disastrous oil spill – Chris Ram

Mar 20, 2022 News

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By Davina Bagot

Kaieteur News – As Guyana prepares to ramp up its oil production to meet the 800,000 barrels of oil per day target by 2025, Guyanese across the miles of the country are beginning to fear the dangers such production goals may bring.
Outspoken Attorney-at-Law, Christopher Ram, who has been keeping a close watch on Guyana’s oil and gas sector, recently told Kaieteur News in an invited comment that he believes US$2 billion in insurance would be a meagre amount compared to the possible implications such an event can cause, not only for Guyana, but to the country’s territorial neighbours.
Following a series of reports from this publication in relation to Guyana’s lack of full liability insurance coverage, the oil giant, ExxonMobil revealed that it is presently working to put a US$2 billion guarantee in place.
The company explained that its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), was established since 1998, and had, as of year-end 2020, almost $US5 billion in assets, which is a primary form of financial assurance. It was keen to note too 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, we’re working with the Environmental Protection Agency and our co-venturers to put in place a combined $US2.0Bn of affiliate company guarantees,” the oil company assured.
To this end, Ram has instead called on the company to give Guyana full coverage in the event of an oil spill.
He explained, “I don’t think US$2 billion would be good enough for any oil spill, both because of the impacts it would have on Guyana as well as the potential to create harm to neighbouring countries.”
Ram, who is also a Chartered Accountant reasoned that while securing a higher value insurance would be important, it is of equal significance for the parent company to agree to cover excess damages.
“We would certainly want to see some sort of a binding guarantee from the contractors including Esso, Hess and CNOOC that they would guarantee all the costs involved in the consequences of any oil spill so I am suggesting that there should be something over and above the insurance. It would be good of course for the insurance to be much, much higher, but in this case… what we want is something from the parent companies,” he shared.
Since 2015, ExxonMobil Corporation, the parent company of EEPGL, has steered clear of being tied to full coverage insurance for its Stabroek Block projects, which are certain to deliver multi-billion dollar profits on an annual basis. Instead, its subsidiary, EEPGL will be officially on the hook if an oil spill occurs offshore. This is the state of affairs with its Liza Phase One, Liza Phase Two and Payara Projects.
In its most recent Environmental Impact Assessment (EIA) submitted to the Environmental Protection Agency (EPA) for its fourth project, the Yellowtail development, EEPGL warned that trans-boundary impacts can result from unplanned events, such as an oil spill.
Section 9.24 of the EIA document, prepared by the oil company’s Consultant, Environmental Resources Management (ERM), states, “The planned project activities are not predicted to have any measureable “transboundary impacts”, (i.e. impacts outside the Guyana (Exclusive Economic Zone) EEZ. All predicted impacts from planned Project activities will occur within the Guyana EEZ. However, there is the potential for transboundary impacts to result from unplanned events that may occur, such as oil spills.”
A release from a loss-of-well control event over 30 days, according to the document, is likely to have impact on over a dozen Caribbean nations. “…there is the potential for oil to reach portions of Trinidad and Tobago, Venezuela, Aruba, Bonaire, Curaçao, Barbados, St. Lucia, Grenada, St. Vincent and the Grenadines, the Dominican Republic, Haiti, and Jamaica,” the EIA details.
Furthermore, the document notes that impacts on resources and receptors in these other countries would be similar to those Guyana would encounter.
These include “(i) impairment of the quality of the natural environment or any use that can be made of it; (ii) injury or damage to property or to plant or animal life; (iii) harm or material discomfort to any person; (iv) an adverse effect on the health of any person; (v) impairment of the safety of any person; (vi) rendering any property or plant or animal life unfit for use by human or unfit for its role in the ecosystem; (vii) loss of enjoyment of normal use of property and (viii) interference with the normal conduct of business,” as is highlighted in Section Four of the EIA.
In addition to these, ERM said that some additional resources could potentially be affected such as corals.
Highlighting this was a group of Caribbean organisations, including the Caribbean Coastal Area Management (C-CAM) Foundation, The Jamaica Fish Sanctuary Network, Jamaica Environment Trust, Institute for Small Islands, Fishermen and Friends of the Sea and Freedom Imaginaries.
In a letter to Kaieteur News back in December, the organisations argued that the Government of Guyana, Exxon’s subsidiary (EEPGL), and its British and Chinese partners have been aware of possible transboundary impacts of a potential deep well oil spill, since the conduct of the first EIA for the Liza 1 development in 2017, yet the countries remain unaware of the dangers they are exposed to as a result of this project.
They called for the EIA to be scrapped, given that consultations were not held with the respective countries which are likely to be impacted.
Violation of Human Rights
The Inter-American Court of Human Rights, in its 2017 advisory opinion on “The Environment and Human Rights” summarised the status of international law in paragraph 196, which states: “Consequently, the Court concludes that States have the obligation to notify other potentially affected States when they become aware that an activity planned within their jurisdiction could result in a risk of significant transboundary harm. This notice must be timely, before the planned activity is carried out, and must include all relevant information. This duty arises when the State of origin becomes aware of the potential risk, either before or as a result of the environmental impact assessment. Carrying out environmental impact assessments requires time and resources, so in order to ensure that States potentially to be affected are able to take the appropriate steps, States of origin are required to give this notification as soon as possible, without prejudice to the information transmitted being completed with the results of the environmental impact assessment when this has been concluded.”
As noted by the Inter-American Court in paragraph 189, this duty “extends to every case in which there is a possibility of significant transboundary environmental harm … as a result of activities planned by a State or by private individuals with State authorisation.
In such cases, notification is usually the first step towards facilitating cooperation and also permits compliance with the duty of prevention [of environmental harm].”
In this regard, the organisations agreed that to date, all of the EIAs conducted by ERM, since 2018, have identified the possibility of significant transboundary harm. Yet, all the EIAs conducted by ERM have failed to identify Guyana’s legal obligations to notify and consult with potential transboundary victims before a project is undertaken.
Taking these concerns and others into consideration, the EPA recently ordered ExxonMobil to fix its impact assessment.

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