Govt. “hopes” against oil spill disaster in absence of full liability coverage

Aug 21, 2022 News

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By Zena Henry

Kaieteur News – The Guyana government does not intend to waste the short time between the world transitioning from fossil fuel to renewables by being slothful in the development of its budding oil sector and as such, has given the approval for oil companies to move swiftly in developing the resource so that Guyana benefits as much as it can before phasing out the commodity. This is the government’s posture however, even as the country is without full liability coverage for oil spill, while pumping currently more than 300,000 barrels of oil per day from its Liza 1 and 2 offshore fields.

In fact, when asked about the government’s concern about the coverage being inadequate and the possibility of having to take the oil company to court over what may be legitimate liability resulting from an oil spill, Vice President Bharrat Jagdeo said it is the “big hope” of all those involved that an oil spill does not occur.

The Vice President was responding to questions from the media last Friday during a Press Conference when he said, “I’m hoping that we would not have an oil spill. That’s what my big hope is, that we would not have an oil spill and I think they (oil operators) are hoping for that too.” It is for this reason Jagdeo said, that the (capping stack) technology is being used and carefulness is being exercised by the operator, “because nobody wants to spend billions of dollars.”

Jagdeo explained that what the oil companies understand is that they are liable for any oil spill according to the law and the Environmental Protection Agency (EPA) for full coverage, and they have so far submitted an insurance policy to cover US$600M per event. “The negotiation now of the so called (US) $2 billion, whether that is adequate or not, it has to ensure that full coverage is there and then we have the assets of the company the US$7B that you can also go against,” the point man on oil and gas stated.  He said that the government’s ultimate aim therefore, “is to have a guarantee that covers all, (and) any such liability.”

The current contention by stakeholders however, is that while Guyana is already pumping from two oil fields, and is set to have an FPSO coming on stream each year, protection for the environment is not as swift as moves to find and produce more oil. Former Chief Executive Officer of the EPA, Dr. Vincent Adams, with extensive knowledge in the oil and gas industry and the qualifications to match, has been one of the key persons highlighting the misses by the government in ensuring the financial and environmental protection of the country in terms of oil spills. He has been especially hard on the government for its apparent lax attitude since he claimed that procedures were already in place when he got fired that would have allowed the government to by now, have a decent insurance policy on which Guyana could have relied on. There was much back and forth about the availability of the policy and what type of policy existed, as Dr. Adams accused the government of abandoning the strides already made.

It was subsequently revealed by US oil giant, ExxonMobil subsidiary and Stabroek Block operator, Esso Exploration and Production Guyana Limited (EEPGL), that Guyana is currently covered by US$600M per oil spill, while a US$2B parent company guarantee from Exxon and its operating partners, CNOCC and Hess Corporation, is currently being worked out. Again, the argument by stakeholders is that the sums being discussed may be inadequate given that cleanup and compensation for serious oil spills can run into millions and even billions of US dollars.

When Kaieteur News asked the Vice President to comment on the concerns identified, he said that the question was merely “parroting” the arguments of those that have criticised the situation and that he was unwilling to go over that conversation. It was also put to the VP that his utterances meant that Guyana is currently pumping oil without having the full liability coverage as claimed by Dr. Adams. To that, the VP questioned rhetorically whether, “We should shut down pumping?” He then pointed out that the Liza 1, Guyana’s first oil field, began pumping oil without any insurance protection, and accused the former CEO of signing off on the EPA permit. Dr. Adams has stated publicly in the past the he did not sign off the Liza 1 permit since he was not employed with the agency at the time.

Dr. Adams, during a Moray House Trust panel discussion in June reiterated that it was the current EPA CEO, Khemraj Parsram, who had signed the environmental permit for Liza 1 and had pointed out several areas that could have been improved in both the original Liza 1 permit and a modified version that was recently approved for the continuance of oil operation within that field.

The VP is adamant nonetheless, that “We are working toward this full coverage; it is by law and by the (EPA) permit they (oil companies) have to do this. Full coverage; that is an obligation at this point in time,” he added.  He said too that the country has received one instrument as part of the insurance policy; that being the US$600M per event while the second instrument, the parent company guarantee, is being worked out.

 

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