Latest update November 26th, 2024 1:00 AM
Who will pay for oil spill damage over US$2.6B insurance coverage?
– Former EPA boss urges Exxon/Government to explain
Kaieteur News – Former Chief Executive Officer (CEO) of the Guyana Environmental Protection Agency (EPA) Dr. Vincent Adams continues to call on the Guyana Government to make it clear who will be footing the bill for oil spill damage over the US$2.6B insurance coverage that is currently being worked out between the government, ExxonMobil and its partners.
Exxon has told the nation that each of its Stabroek Block projects is covered by a US$600M policy, while it is still in discussion with the government for a combined US$2B package of affiliate company guarantees; bringing the total coverage cost to US$2.6B. Outside of this sum, Adams insists, all Guyana has is a “word of mouth” that the oil companies will spend more money to handle oil spill liabilities above the US$2.6B. Adams made his case during an Oil and Gas Governance Network (OGGN) symposium held in New York Saturday, where he maintained that Guyana faces significant environmental and financial risks without having guarantees that hold the oil operators liable for any cost from a spill occurring during their offshore operations.
Four million barrels of oil flowed from the damaged Macondo well over an 87-day period. Guyana is set to pump 1.2 million barrels of oil per day by 2027
Adams told the gathering that during his tenure at the EPA, Exxon insisted on giving verbal commitments toward covering oil spill damage its subsidiary- Esso Exploration and Production Guyana Limited (EEPGL) could not handle, instead of providing the written guarantee the EPA was seeking. He said that today, because the government did not ensure the written guarantee was provided, Exxon continues to just say it will do without providing the parent company guarantee. He stated in fact, that during debates regarding the full liability coverage motion in Parliament weeks ago, government Members of Parliament, including Natural Resource Minister Vickram Bharrat, defended the unavailability of full liability policy claiming that it would be expensive, and that there are no insurance policies covering blank figures.
Adams charged that the guarantee from Exxon cost nothing. He said it is a guarantee letter from the company committing to them covering all liabilities over what EEPGL can. “It’s to put something in writing to say if anything happens… this is a guarantee, put your signature to it.” Adams said that as a professional dealing with the oil industry in the US, it is required to have agreements in writing. He said “The one lesson they teach you every day is that if it is not in writing it does not exist.”
Given the “industry leading speed” at which Guyana is developing its oil endowments, Adams said that Guyana must weigh the high risk it faces regarding an oil spill. He explained that the formula for risks is the chance of an occurrence multiplied by the consequence. He continued that the Macondo oil spill had a small chance of occurring, but it did and brought with it costs reaching some US$70B. He related that even an oil spill 1/10 the size of the dreaded Macondo disaster which occurred in the Gulf of Mexico would require three times the US$2.6B which Exxon is offering. Adams noted therefore that while Exxon speaks to a small chance of an oil spill occurring they have stayed clear of acknowledging the consequences.
It is on that backdrop that Adams insists that the Guyana must have the parent company guarantee in writing so that if a spill occurs like the Macondo, Guyana does not just get the US$2.6B, and is left with massive debt or having to be in court, fighting Exxon to handle the effects of its oil projects. The former EPA head is also calling on the government to ease the minds of citizens and publicize the documents.
Just days ago, President of ExxonMobil Guyana Alistair Routledge said again that his company intends to go above its commitments on paper in responding to an offshore disaster. He reiterated too that the coverage the company is offering is the “highest international standard for every single well” being drilled. He pointed to the first capping stack being in country in case of a well blow out and added that because the company is focusing on operational efficiency, a disastrous occurrence is “extremely low”.
Adams has claimed however that the sum being offered is inadequate for any massive spill here and that the parent company guarantee must be received by Guyana in writing. He insists too that oil operators are currently producing the commodity illegally at the Liza 1 and 2 wells as there is no parent company guarantee required by the EPA permits.
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