EPA still pressing ExxonMobil to provide parent guarantee for entire Stabroek Block - Parsram

EPA still pressing ExxonMobil to provide parent guarantee for entire Stabroek Block – Parsram

Apr 02, 2022 News

Kaieteur News – Even though the government has provided its blessings for ExxonMobil to move ahead with its US$10B Yellowtail Project, Head of the Environmental Protection Agency (EPA), Kemraj Parsram has assured that the regulatory body is still working to secure a mix of financial assurance to cover the entire oil rich Stabroek Block.

EPA Head, Kemraj Parsram

In terms of the oil and gas sector, Parsram explained that there are various forms of financial assurance while adding that the first form already in the proverbial bag is self insurance. He said based on a company’s financial rating and their liquidity, it is typical across the globe that self insurance is accepted as a form of financial assurance. Parsram said regulators can also require insurance similar to an insurance policy which was taken out by Esso Exploration and Production Guyana Limited (EEPGL), the operator of the Stabroek Block.
“…then this third aspect which we are now trying to finalize is the parent guarantee or what you can also call parent company/affiliate guarantee. So these are three forms typically used globally that cover financial assurances. There are other forms such as bonds and letters of credit; they are all in the same bracket but these are the major ones and we are looking at a combination of these three, not one or the other,” expressed the EPA Head.
He added, “So within the current permits, well you don’t have to state the self insurance, that is a given, and any public document that is available, you can check on the EEPGL as well as ExxonMobil’s financial rating and you can get a sense of their self insurance and their liquidity and value.”
The EPA Head was keen to note that insurance is already in the permits for the Stabroek Block projects, but talks are ongoing for what is termed “parent guarantee”. He said progress is being made in this regard.
ExxonMobil had held a briefing with reporters earlier this month to assure them that it has the technical and financial resources to address a spill, though it is very unlikely to occur. The company said it adheres to an internationally accepted, tiered response system used to determine the requirements of response personnel and equipment. He 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.
“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. 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,” President of ExxonMobil Guyana, Alistair Routledge said.
The issue has been one of great contention, with former EPA Director, Dr. Vincent Adams, and other political commentators being fiercely critical of ExxonMobil and the EPA.
In an address to a Health, Safety, Security and Environment (HSSE) Conference held by the American Chamber of Commerce Guyana (AmCham) on Thursday, Parsram called for an end to antagonism in environmental discourse.
“The traditional antagonistic way of addressing environmental sustainability is no longer tenable. It’s a past era approach, nothing changed, we need other approaches,” the chief environmental regulator said.
Cooperation, partnerships, open conversation and trust, Parsram argued, will go a far way in solving problems.
He also said companies must act in good faith and communicate with the EPA on issues and challenges, so they can work together to find solutions, ensure compliance, and prevent and manage harm.