‘We must not wait’ for Gas-to-Shore insurance – Former EPA Head

Aug 21, 2022 News

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…says can be secured with letter of guarantee

By Davina Bagot

Kaieteur News – Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams disagrees with Vice President Bharrat Jagdeo that insurance for the US$1.3 billion pipeline to be constructed by oil giant ExxonMobil cannot be insured as yet, since the project’s final cost has not yet been decided on.

In fact, Adams has rubbished the “senseless” claims by Jagdeo who believes it is “common sense” for a project to be completed before an insurance policy is decided upon.

The former EPA boss, who holds a Masters Degree in Petroleum and Geological Engineering, during an exclusive interview with Kaieteur News on Saturday, stressed the need for the natural gas pipeline to be secured, especially since seven years after the discovery of oil, Guyana is yet to have full liability coverage in the event of a spill.

In response to the Vice President’s assertions, Dr. Adams argued, “That doesn’t make any sense. I mean we can’t wait until the structure is put up. You already have a design, and as a matter of fact for Liza Two for example, the full coverage language was put in place before the project even started up. I believe it was in June 2019 but that project just started up.”

He pointed out that the GTE Project Manager from Exxon, Friedrich Krispin, said during a public consultation that the oil company will not walk away from any damages, yet the operator is reluctant to sign onto a guarantee letter to simply say they will cover all liabilities caused by them.

To this end, the Specialist argued, “Why wait until everything is finalised? All this is part of the negotiations as part of the entire package. Exxon needs to commit in writing for that gas pipeline that they will cover all liabilities whether it is with insurance or company guarantee that they will cover all cost attached to all liabilities if something happens. What’s so unfair about that?”

During a three – hour long Press Conference on Friday at the Arthur Chung Conference Centre, Liliendaal, Georgetown, VP Jagdeo debated the need for insurance, prior to the pipeline becoming operational.

In responding to a question by this newspaper on whether the People’s Progressive Party/ Civic (PPP/C) administration has entered into discussion with ExxonMobil Guyana for the pipeline aspect of the project, he insisted, “It’s reasonable. It’s common sense. You can’t not know the cost of the total pipeline as yet and seek to insure it. You understand. If you have a house and you build a house for $20 million, you don’t know the house, you start the foundation and you go to the insurance company, they’d say what are we insuring?”

Dr. Adams, however, does not agree with the Vice President’s reasoning. He said, “If you got a pipeline blowout it doesn’t matter what the pipeline cost. They are saying it’s going to have 50 million cubic feet of gas coming through there but the point is all Exxon needs to do is sign a letter to say we will cover all damages that occur. I don’t know what the damage could be, you don’t know, and the government doesn’t know, and that’s why you cannot put a cap on it.”

To drive home his point on the need for proper safeguards to be instituted, the former EPA Head reminded that an oil spill in Peru forced the government to sue the operator as there was no provision in place. As such, he reasoned, “Is that where we want to be? To wait until something happens to start putting all this in place? Or will we just ask them to sign a letter of guarantee where they can safeguard the operation?”

Dr. Adams added, “Jagdeo has a way and he sounds very confident when he is making these statements but it doesn’t make any sense. Liability coverage has nothing to do with the design of the pipeline, it’s the damage and we already know how much gas is going to go through that pipeline. So to answer him I’d say let them have a guarantee letter to say they will cover everything and if they can’t do that he needs to say why, because if they are not going to press Exxon to cover these damages, is he saying then that the government will have to stand these costs or will they share this cost with Exxon?”

Given that the estimated US$1.3 billion expense will ultimately be on the backs of Guyanese, citizens have been questioning whether this investment will be safeguarded with a sound insurance policy. Jagdeo explained that the cost of the project will be repaid through the monthly electricity bills of Guyanese. He has calculated that the cost of power will be slashed in half from the current $30 cents per kilowatt hour to $15 cents per kilowatt hour.

Jagdeo was asked if the government is also considering any of the risks in its analysis of the project and conclusion that it will be viable. To this end, he acknowledged that while the possibility of an explosion exists, it simply does not change the commercial viability of the US multibillion-dollar project.

 

 

 

 

 

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