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In face of bad oil deal, Guyana should at least protect its environment
…new legal challenge highlights citizens’ growing concerns- IEEFA
Kaieteur News – With another court challenge filed, this time against the recent issuance of the environmental permit for the Liza One offshore oil project, the Institute for Energy Economics and Financial Analysis (IEEFA) believes that the action is a reflection of citizen’s growing concern regarding the handling of the local oil sector.
The International Agency which has been paying attention to the local oil industry and offering its advice, reminded that Guyana already has a bad deal that covers the Liza One project and offered therefore, that the country should have at least been a bit more mindful of negative environmental impacts. Frederick Collins and Godfrey Whyte, just weeks ago, filed court action against the Environmental Protection Agency (EPA) to force them to prove that they did not approve the Liza One environmental permit without the legal requirement of full oil spill liability being in place.
And if this was done, the litigants are also asking the court to have the EPA fully comply with the requirements. In its latest writing, the IEEFA said however that based on the plaintiffs’ contention, when a permit expires, the law requires a new permit application and review, particularly when conditions have changed. It said that on May 31, Guyana’s Government simply issued a new permit for the Liza 1 oil field, without conducting a new review. “The requirement for a new permit process for Liza 1 is not just paperwork,” IEEFA submitted. “It is essential to protect the public. Given that greenhouse gas emissions are at the center of the discussion of this project, it is also essential for addressing climate impacts,” the organisation continued. It highlighted that a major controversy that surrounded the Liza One project is its unplanned (non-routine) flaring of gas to the atmosphere. In an original environmental impact assessment, ExxonMobil, the field operator, told Guyana it could guarantee zero non-routine gas flaring. “Faulty equipment, however, caused ExxonMobil to flare gas from almost the first day of production in 2019.” And amid public outcry, the Government imposed a fine on the company, but also changed the permit to allow some flaring—a decision that is the subject of another legal challenge brought earlier this year, and is still to be determined.
IEEFA offered however, that “It would have been more prudent for Guyana to conduct a new environmental impact analysis, through a permit review process.” It said that, “A review would have provided the public with an analysis of the failure to prevent non-routine flaring, ExxonMobil’s equipment repairs, and a plan to solve the problem. Once again, though, the Government chose to cut corners,” the organisation lamented.
It said that “the existing agreement that covers the Liza 1 project is already a bad deal for Guyana. The oil companies receive an unfair revenue split. Guyana cannot close its budget deficits because it is receiving too little revenue from the Liza project. At the same time, Guyana has provided substantial tax giveaways to the oil companies and has handed them a lucrative decommissioning deal that a March 2022 IEEFA analysis found will allow the three companies to pocket a total of $3.2 billion.”
IEEFA said that while the recent case is a challenge to the Government of Guyana, “it is also an example of continued mismanagement by ExxonMobil.”It said too that “the Government’s decision to ignore public concerns about the project and to push the new permit through without a proper review only makes matters worse for the people of Guyana.”
The organisation said that Guyana is in a hurry to develop its oil and gas reserves as it faces an eventual major reduction in demand for oil and gas as a result of global responses to climate change. “Its failure to conduct a proper review of the new Liza 1 permit, however, leaves pollution and climate risks unaddressed.”
Guyana has already lost one lawsuit regarding the Liza One project which was originally granted a more than 20 year permit which would have cut corners on the review process. Citizens however challenged that permit and won; meaning that Guyana must now review the conditions of Liza 1 permit every five years. IEEFA says that failure to conduct a proper review of the project before the latest permit was issued flies in the face of the court’s earlier directive.
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