Govt. kills Motion for full coverage liability for oil spills

Jul 23, 2022 News

---

By Davina Bagot

Kaieteur News – Exactly 154 days since a Motion seeking full liability coverage for oil spills was first presented to the National Assembly by Opposition Member of Parliament (MP), David Patterson, a four hour debate was finally allowed by the Speaker of the House, Mazoor Nadir on Thursday evening, which ended in the Motion being thrown out by the governing side.

Patterson took the spotlight from 20:16hrs to present the Motion that sought to not only include full unlimited liability coverage for oil spills and other disasters related to petroleum production, but also direct the Government of Guyana to conduct an independent analysis on the possible ill effects of an oil spill, and present this report to the Parliamentary Committee on Natural Resources to be used as a reference for all other future oil development submissions.

Four members on the Opposition’s side, inclusive of Mr. Patterson, Annette Ferguson, Amaza Walton-Desir and Vincent Henry all stood in defense of the Motion, while from the government’s side, it was the Minister of Natural Resources, Vickram Bharrat that led the arguments against the Motion. Also contributing to the debate from that side of the House were Sanjeev Datadin, Minister within the Ministry of Public Works, Deodat Indar and Minister of Home Affairs, Robeson Benn.

Patterson, the Shadow Oil and Gas Minister in the House engaged in a brief squabble with the Speaker over what he described as the emasculation of his Motion, referring to the fact that 13 of his 20 clauses were removed, while two were amended. Nevertheless boasting that he was confident in the successful passage of the Motion, Patterson grounded his arguments on Guyana’s projection to rapidly increase oil production within the next five years’ time.

He told the National Assembly, “Oil production in offshore Guyana is expected to increase rapidly, tripling from what is guessed to be its current rate of about 300,000 barrels of oil per day (bopd) to close to 1 million bopd in the next few years; and Mr. Speaker, I say guess, because, unlike the Coalition which adhered to its moral responsibility of full transparency to our people, the PPPC’s modus operandi is to dodge and hide information that belongs to the people.”

To this end, the former Minister of Public Infrastructure reasoned that there will also be additional threats of oil spills off Guyana’s coasts, bringing his Motion of liability coverage into focus. He was keen to point out in his presentation that “the emergency response and cleanup of the British Petroleum Macondo oil spill in the Gulf of Mexico have so far cost more than $70B USD and still counting, but inexplicably, the Vice President of Guyana (Bharrat Jagdeo) has been waffling all over the place changing his tune from a $2B insurance from Exxon, to parent company assurance, to now peddling a piddly $600M insurance coverage which is less than one percent of the cost of the Macondo spill.”

On the Opposite side of the room, Minister Bharrat said that the administration is aware of how devastating an oil spill can be, hence provisions have been made to ensure such an activity does not occur. Even if it does, he assured that the oil company has been required to import a capping stack to lay on standby, in the event of such an occurrence. A capping stack is a piece of equipment that is used to place over a blown out well as a cap to prevent further damage that may have been caused.

In providing a legal perspective, the PPP’s Sanjeev Datadin said, “Unlimited insurance presupposes that it matters not what takes place, the insurance coverage will exist. So whether it is one dollar, $1 billion, $100 billion, there would be that coverage. Now perhaps the honourable member can look into what would be the cost. Can you imagine going to an insurance company for coverage that you don’t know how much it’s likely to be? So this becomes an assessment of risk, risk that is unlimited…”

Additionally, he said that there are two “undesirables” when it comes to unlimited insurance. According to him, “it makes the project itself expensive, it likely to slow down the pace of growth, thereby affecting jobs and revenue to the country. Not only does it cost us revenue to pay for this policy, this unlimited insurance, not only do we have a cost incurred for that, but we actually lose revenue because we are going to go slower. It makes projects that would otherwise be acceptable and financially viable to be no longer financially viable.”

Secondly, Datadin noted that such an insurance coverage would take small companies out of the equation, as they would not be able to afford such insurance.

Meanwhile, Minister Benn during his contribution to the debate said that including full coverage insurance is completely impossible. In fact, he told Patterson that filing such a Motion in the House was a waste of time. He argued, “It is normal in any development for there to be risks. It is normal for any undertaking for those risks to be assessed…it’s completely impossible and so in fact that complete discussion is a complete waste of time and the honourable Member Patterson should be ashamed of himself…”

The final contributor from the government’s side was Minister Indar who argued that the Motion seeking full liability coverage was meant to drive investors away from Guyana. “…What this document intends to do is show you the extremes of what can happen. This, what they have drawn, is the example of the extremes…I suspect and I believe that this motion is designed to chase people out of this country. Literally chase people out of this country.”

He went on to say that, “Any person that runs a business in their right mind frame and sense would never commit to an unlimited liability. The reason being is how do you calculate unidentifiable costs? How in the world does a company do that, to calculate those costs? How do they account for that in their books on a yearly basis?”

Patterson in his final arguments said he was astonished at the responses of his peers in governments, but made it clear that he will continue to file more motions on the subject.

At exactly 12:03 am on Friday, the debate finally concluded with the Speaker ruling after a vote in the House, that the Motion was defeated.

 

 

 

 

 

 

 

 

 

---

---