OGGN petitions for Exxon and partners to deliver parent company oil spill guarantee

Dec 25, 2022 News

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…says company should be prosecuted for not following the Law

Kaieteur News – With some 360,000 barrels of crude currently being pumped every day from the offshore Stabroek Block, and no full disclosure on how secure Guyana is against oil spill disasters, advocacy group, ‘Oil and Gas Governance Network (OGGN)’ is calling on citizens and other concerned persons to sign its petition demanding ExxonMobil and partners honour their oil spill commitments.

The petition, which was started by Woman Activist, Karen De Souza, said that while insurance is a legal requirement to have the oil companies operating in country, Guyana has failed to ensure its own protection by not having the oil majors commit to all liabilities.

The ExxonMobil led Stabroek project is currently estimated at over 11 billion barrels of oil. Two projects are already in motion while another is expected in 2024. The oil consortium expects to start oil projects every other year following that and will be providing US$600M per project.

While industry experts and stakeholders have argued that the sum is inadequate, the oil companies have also failed to give a written commitment to cover all liabilities caused by the spill.

The petition said that, “We draw your attention to the failure of Guyana’s Environmental Protection Agency (EPA) to enforce the legal requirement for full liability coverage by the parent companies – ExxonMobil Corporation of Irving, Texas; China National Offshore Oil Corporation (owned by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) of the People’s Republic of China) and Hess Corporation, New York – in the event of any oil spill(s) for which they are legally responsible in Guyana’s sovereign waters.”

It said that the requirement for full liability coverage is set out in the environmental permits issued to Esso Exploration and Production Guyana Limited (EEPGL). EEPGL is the operating company and permit holder and is a subsidiary of ExxonMobil.

“The permits have been signed by authorised representatives of the parties and are dated and sealed. EEPGL thus acknowledges what it should do – that is, issue the letters of guarantee. The time limit allowed in the permits is long past. Thus, EEPGL is in default of its legal obligations.”

The petition said that the intentions of the clauses on full liability coverage are clear in the environmental permits issued by the EPA for the four oil fields. The clauses are backed by section 4 (4) sub-sections (a) to (c) of the Environmental Protection Act. It said further that “the EPA should have informed the Director of Public Prosecutions (DPP) of these defaults, and the DPP should have instructed a police prosecutor, as this is a case of criminal wrong-doing.”

“Minister, we demand that Guyana must not be liable for any of the costs if there were an oil spill for which the ExxonMobil consortium or its affiliates/contractor have legal responsibilities. The aforementioned parent companies of consortium members EEPGL, Hess and CNOOC must comply with the terms of the permits issued to the consortium and guarantee full liability coverage.”

It was noted that Section 12.5 of the Environmental Permit issued to EEPGL by the EPA for the Liza-2 oil field, dated 17 January 2022 says that, “The permit holder must…provide from the Parent Company or Affiliate Companies…one or more legally binding agreements to the EPA, undertaking to provide adequate financial resources…to pay….their respective environmental obligations…if EEPGL or its Co-Ventures fail to do so….”

“We demand the release of the signed guarantees by the parent companies of ExxonMobil, Hess, and CNOOC that they will cover ALL costs for control, clean-up, compensation and restoration costs for oil spills and other environmental pollution, as well as contingent liabilities and settlements costs, over and above the completely inadequate insurance payout, as required by the law and as specified in the environmental permits for the Stabroek Block issued by the Environment Protection Agency,” the petition said.

De Souza’s petition was published last Saturday but already has 181 signatures with a target of 200 persons. This will allow the message to be featured and have a greater reach.

The insurance matter continues to be a contentious one within the local oil industry as several legal requirements continue to be ignored.

Veteran Petroleum Engineer and former EPA Chief Executive Officer, Dr. Vincent Adams has said that Exxon and partners should not be operating at the Stabroek Block if they do not provide the parent company agreement. He said that during his time at the EPA, held off on signing EEPGL’s permit to force the companies to put insurance coverage in place. Adams said he was also able to have Exxon provide a US$2.5B insurance coverage, at the time while discussions were ongoing for the parent company coverage.

This may have changed since Adams’ departure as the oil companies are now operating under the US$600M coverage with no parent company guarantee. Both the oil companies and the Government were found to have been dishonest when providing information regarding the reduced US$2.5B coverage as well as its legally required placement with a local company. Information is that no local company holds any oil insurance policy in country despite EEPGL’s former Country Manager Rod Henson reporting that the policy was with a local firm.

As it relates to the parent company guarantee, Dr. Adams said that the commitment will cost the oil companies a cent since it is just an assurance. The oil companies have already said that they intend to harvest Guyana’s oil as fast and safely as possible. The parent company guarantee is just in case anything happens and EEPGL is financial inadequate to handle the accident.

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