Bank of Guyana, Insurance Association confirm discussion for in-country oil spill coverage

Jul 30, 2022 News

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By Zena Henry

Kaieteur News – The topical issue regarding insurance coverage for any oil spill seems to have been a major priority for the Insurance Association of Guyana as the local body and  Bank of Guyana have both confirmed discussions that were being had to not only facilitate the availability of an oil spill policy for operations here, but to also ensure the coverage was being held in country.

Central Bank Governor Dr. Gobin Ganga and prominent insurance practitioner Biswar Panday, told Kaieteur News that they were both present at a meeting some four years ago which brought different local agencies together to ensure that whatever insurance policy that was being discussed at the time for the sector, would be available in Guyana.

This newspaper sought a comment from the gentlemen to understand what was taking place in the earlier stages of the industry, when the country was drawing closer to the oil production and moves were being made with regards to securing insurance for the sector. Former Environmental Protection Agency (EPA) Chief Executive Officer, Dr. Vincent Adams has been stressing that certain actions were taken and provisions were already in place that should have allowed the country, by now, to have better oil spill insurance coverage if the government had continued along that path.

Adams has been claiming that he was able to get Esso Exploration and Production Guyana Limited (EEPGL), and its consortium partners to commit to their parent companies covering all oil spill liabilities beyond what the operator could handle given that a US$2.5B sum, which he said he also secured, would not be enough for a devastating occurrence.  He said that the Stabroek Block operators were thus supposed to discuss amongst themselves what type of policy would be provided to the country to encapsulate the parent company liability, and return it to the EPA to present what they came up with.  In the meantime the stage was being set for the facilitation of the insurance policy as he claimed that the insurance association began to ask questions about where the policy would be held since it is supposed to be in-country. That is when, he claimed, that the BoG, the insurance association and other stakeholders met at the Central Bank to discuss the issue to “legally transfer” the policy to Guyana.

The government has nonetheless denied having any documentation or information that suggests the country was moving in that direction. At budget debates relating to the full liability coverage motion brought on by opposition Member of Parliament (MP), David Patterson, Natural Resource Minister Vickram Bharrat reiterated that the government continues to be unsuccessful in locating the documents that said Guyana is heading to full liability coverage which spoke predominately to parent company liability. He even went on to suggest that the former EPA head, Adams, might have removed the documents from the agency and thus urged the previous administration to return same so that the government could see what work was done.

Dr. Ganga told the Kaieteur News that the meeting on the matter had occurred a long time ago and it was the only one held so far. He explained that he facilitated the meeting between the agencies, explaining in his capacity as Governor, he urged the importance of insurance coverage for the oil sector. Ganga said that it was agreed at that meeting to start the process toward the country having the insurance and so the discussion was being had on “the role of the insurance industry” and the bank as a regulator, facilitated same. Based on his recollection, Dr. Ganga said that the then head of the Department of Energy Dr. Mark Bynoe and his team was present and they were basically spearheading the insurance charge. He said the EPA legal team was present as well as representatives of the insurance association.

Mr. Panday also identified the Department of Energy, the EPA, and the insurance association as being part of the discussions for the insurance policy. He related that the discussion was an “exploratory” one where discussions were about the inclusion of the insurance industry. “Overall, it dealt with insurance for the oil and gas industry and the role members of the association could play,” Panday informed. He said that at the time, there was no specific insurance policy being discussed, but reiterated that the exploratory talks was to see how the policy could be facilitated locally once attained. Panday said that the last he remembered of the meeting is that a subcommittee was to be constituted by the bank to make recommendations on the involvement of the insurance industry in the country’s bid to be protection from oil spill devastation.

Alistair Routledge, current President of ExxonMobil Guyana insisted last March that no US$2.5B was ever agreed to between Exxon and the EPA. He said that the Stabroek Block consortium and the EPA are currently working on a combined US$2B package of affiliate company guarantees. Adams has however dared former Exxon President Rod Henson to declare that no agreement was made to have additional protection for the country since it was that past company head with whom Adams said all of this was happening.

Adams has called the government dishonest for not only abandoning the strides toward adequate protection against oil spills, but for deliberately keeping information from the public that speaks toward these advances. Adams has also accused the government of being more concerned about money than protecting the environment.

In the meantime, for a country that is developing its oil endowments at industry leading speeds with over 1.2 million barrels of oil to be pumped per day as early as 2027, Guyana is currently insured at a US$600M per occurrence at a project while the additional US$2B is still being finalized.

 

 

 

 

 

 

 

 

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