Oil company working in Guyana still to clean-up spill in Peru 6 months later

Jul 27, 2022 News

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Kaieteur News – Spanish oil giant, Repsol, which is operating right here in Guyana, is still to honour its obligation to remediate the effects of an oil spill that occurred in Peru more than six months ago.

Peru’s fight to get the oil company to take responsibility for the environmental disaster – comes even as the Guyana government on Thursday threw out a Motion that was seeking full liability coverage from oil companies for oil spills.

It was on January 15, when approximately 12,000 barrels of crude was spilled from one of the La Pampilla refineries, which are owned by the Spanish oil giant, off the coast of Ventanilla in the region of Lima, Peru.

Repsol had blamed the spill on shock waves from an undersea volcanic eruption near Tonga in the South Pacific Ocean. It was reported that at the time of the undersea eruption, Suezmax tanker, Mare Doricum, was offloading a shipment of Brazilian crude oil at a La Pampilla refinery offshore mooring buoys when a quantity of the cargo was released.

The spill triggered a flurry of accusations and several Peruvian officials had called for those responsible to be held accountable.

To date, Peru’s Environmental Assessment and Control Agency (OEFA), an agency attached to the Ministry of the Environment (MINAM), had to impose several fines on Repsol for non-compliance with the cleaning and remediation of the January 15, spill.

To date, the country is grappling to recover from what has been called an “ecological disaster.”

Last week, Peru’s OEFA had to impose another fine on the oil giant for not complying with the identification of the areas affected by the displacement of the hydrocarbon spilled. According to recent Peruvian reports, the OEFA is still to publish the official report on the environmental impact the spill had.

The contaminated waters affected Peru’s artisanal fishermen and their families. As such, the Peruvian government had ordered the oil giant, to pay a total of US$1400 compensation to each citizen affected by the spill. The government took the aforementioned route since a legal process for compensation to the affected families would take a long time.

The first action taken against the company was by Peruvian judge, Romualdo Aguedo, on January 28, 2022, who granted an order to prevent four Repsol’s executives from leaving the country. Peruvian media reported that Judge Aguedo imposed an 18-month ban on the grounds of the potential risk that the officials might leave Peru.

Among them were refinery manager, Jaime Fernández-Cuesta Luca de Tena; terminal manager, Renzo Alejandro Tejada Mackenzie; environmental manager, Gisela Cecilia Posadas Jhong and production manager, José Gregorio Reyes Ruiz.

In January, the Peruvian government had suspended the company’s hydrocarbon loading and unloading activities. Subsequently, a fuel shortage in Peru forced the country to lift the suspension on Repsol’s operation temporarily. Repsol was only allowed to continue its operations for 10 days and under supervision from the OEFA – that operation has come to an end.

Importantly, the effects of the spill had led to the country’s Minister of Environment, Modesto Montoya, citing the importance of legislative reform to adequately deal with companies after oil spills and to protect citizens. The minister had pointed out that Peru’s current laws are too permissive with the pollution produced by companies.

In May, the Peruvian authorities filed a lawsuit against Repsol, for a total of US$4.5B for the environmental disaster.

According to Peru’s National Institute for the Defense of Competition and Protection of Intellectual Property (INDECOPI), the lawsuit was filed before the 27th Civil Court of the Superior Court of Justice of Lima, on behalf of more than 700,000 affected citizens.

INDECOPI has filed the first civil claim for liability for diffuse interests in Peru against Repsol, due to the oil spill in Ventanilla that affected consumers, users and third parties.

The civil claim for compensation for damages was filed for a total of US$4.5B against several defendants: Repsol SA (Spain), Mapfre Global Risks (Spain), Mapfre Peru Insurance and Reinsurance Companies (Peru), La Pampilla Refinery (Peru), Transtotal Maritime Agency (Peru) and Fratelli d’amico Armatori (Italy).

Kaieteur News had reported that the process in the lawsuit that was filed against the oil giant, allows an abstract valuation of US$3B for the damages caused by the spill and US$1.5B for the non-material damage to consumers, users and third parties.

This week the matter will come up before the 27th Civil Court of the Superior Court, where INDECOPI will be defending the citizens in the litigation.

On the local front, despite promising to press ExxonMobil Guyana (Esso Exploration and Production Guyana Limited) on the issue to have the parent company (ExxonMobil) for the Guyana Operations sign on to binding full coverage insurance, the government has shifted that responsibility to the Environmental Protection Agency (EPA).

Last Thursday, a four-hour long debate on a Motion seeking full liability coverage for oil spills ended with the Motion being thrown out by the government.

The Motion that was filed by Opposition Member of Parliament (MP), David Patterson, who sought to not only include unlimited liability coverage for oil spills and other disasters related to petroleum production, but also to direct the Government 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.

While the Government of Peru has to take legal action against the oil company responsible for an oil spill, Guyana in contrast, continues to give ExxonMobil permission to operate without a guarantee that it would cover the cost for any oil spill that surpasses the capacity of its subsidiary to pay.

In February, last, ExxonMobil announced that it has commenced oil production at Guyana’s second offshore development area called Liza Phase Two in the Stabroek Block. It would be poignant to note that with the coming onstream of the Liza Phase Two operations, the country now has an installed production capacity of some 360,000 barrels of oil daily.

This is from the two Floating Production Storage and Offloading Vessels—Liza Destiny and Liza Unity—currently operating in the prolific Stabroek Block.

Additionally, the operations are being undertaken, producing 360,000 barrels of oil daily (bpd) in Guyana without full coverage insurance in case of a spill domestically.

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