Letter surfaces proving insurance talks were held on full liability coverage

Aug 11, 2022 News

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– as stakeholders press Govt. to release documents

By Zena Henry

Kaieteur News – Citizens and other stakeholders continue to press the Irfaan Ali administration and Stabroek Block oil and gas operators to publicise documents proving what insurance coverage is available to Guyana in the event of a disaster at the offshore production sites.

The discussion on full liability coverage has once again picked up steam as more proof on this direction surfaces even as government maintains that no work was done in the past to ensure such protection.

Former Chief Executive Officer of the Environmental Protection Agency (EPA) Dr. Vincent Adams has painstakingly described steps his and other state agencies, such as the former Department of Energy (DoE) were taking at the time in placing Guyana on a better environmental path within the oil sector. Apart from moves to secure a US$2.5B insurance coverage from Esso Exploration and Production Guyana Limited (EEPGL), Adams said he was also able to get a commitment from its parent company under previous country president, Rod Henson, to guarantee oil spill coverage beyond what it could afford.

Since Adams claimed that the work was in the pipeline and had not materialised before his departure from the EPA in 2020, the government and Exxon’s new country President, Alistair Routledge have denied the former CEO’s assertion and dared him to provide the documents to substantiate his claims. The Kaieteur News has revealed however, that both the Bank of Guyana (BoG), the Insurance Association of Guyana and the former DoE were all involved in an important meeting that was supposed to ensure that whatever insurance the EPA was discussing with Exxon at the time would be held in country as is legally required. Adams said that the meeting was to support the insurance policy Exxon would provide as dictated by the EPA. As such, Exxon and its partners; Hess Corporation and CNOOC were supposed to discuss among themselves how they would handle the coverage which included parent company guarantee and return it to the environmental agency for approval.

A new piece of information provided just days ago by the Alliance for Change (AFC) now appears to be additional proof toward the acquisition of the necessary oil spill coverage. It said that not only was Exxon required to have EPA’s approval on the insurance policy, but that the Bank of Guyana was also supposed to sign off on the coverage once they were satisfied with what was provided. The December 15, 2020 letter which was released by the party, was from the then acting Executive Director of EPA, Sharifah Razack to Exxon President, Alistair Routledge, acknowledging receipt of correspondence dated November 30, 2020, providing “…a summary of the steps taken by EEPGL to comply with the insurance requirements prescribed by the Agency in the Environmental Authorization relative to the company’s offshore petroleum and production facilities.” The letter to Routledge spoke further of a December 22, 2020 meeting where Exxon was required to submit to the EPA one day before “…copies of the agreement (s) which provide coverage for each of the company’s various offshore operations (both production and exploration) together with copies of BoG’s approval /no objection for the respective insurance agreement…”

The November 30, 2020 document which the then acting EPA head acknowledged, would have been received just days before Dr. Adams was fired from the EPA. The AFC believes therefore, that the copies of the insurance the EPA was talking about could only be that which the agency had discussed with Exxon while Adams was at the helm of the agency.

The AFC said that the document, “…connects the dot clearly showing that the Government has been remorselessly lying to the people of Guyana when it continuously kept denying its awareness of any plans or consideration thereof, or any existence of liability insurance or parent company guaranteed coverage.” The letter also tells, all for the first time, that there exists a “tripartite agreement” involving the Bank of Guyana requiring the BoG to give no-objection/approval for all production and exploration activities; and most notably requires that the insurance procured by EEPGL be supported by BoG per the tripartite agreement – “once again providing unmistakable validation that insurance was “procured”, the AFC charged.

In light of the new information, the AFC has joined calls for the government to release insurance documents to prove that the country is adequately covered by the policy against oil spill damage. It said that the government should release the tripartite document involving the BoG; the “copies” of insurance documents/policies referenced in the letter and requested to be delivered to EPA at the December 22, 2020 meeting; the draft Parent Company Guarantee proposals and related documents that were being discussed between the EPA and EEPGL Attorneys.

Dr. Adams has also challenged the government to prove that the relevant insurance coverage is available by publishing the documents. He has also challenged the government and Exxon to publish the insurance documents to prove that they are not breaking the law by operating the Liza 1 and 2 projects without the parent company agreement and other insurance documents that are required in the EPA permits, especially since those documents make it clear that failure to have the coverage invokes an immediate termination of the permit. Civil society group, Oil and Gas Governance Network (OGGN) advocates have also called for the release of the insurance documents. In his recent letter to the editor, member, Dr. Jerry Jailall questioned why it is hard for the government, the EPA and the oil operators to release the insurance policies and related documents to show proof of the coverage. He called on “the PPP government, the EPA, Exxon, Hess and CNOOC to release all insurance policies and related documentation on this ongoing vexed question of whether the oil companies have adequate insurance in the event of an oil spill.”

 

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