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ExxonMobil submits draft agreement for oil spill coverage
…study of cost for worst case scenario under review – EPA Head
Kaieteur News – Head of the Environmental Protection Agency (EPA), Kemraj Parsram has confirmed that the regulatory body is in receipt of a draft parent guarantee for oil spill coverage from ExxonMobil Corporation. This is to complement the insurance policy in place by Exxon’s subsidiary and operator of the Stabroek Block, Esso Exploration and Production Guyana Limited (EEPGL).
EPA Head, Kemraj Parsram
Parsram said the EPA is also in receipt of an assessment regarding the realistic cost for an oil spill in a worst case scenario. This was an independent study he said, adding that it is in keeping with the provisions contained in the permit governing EEPGL’s fourth project development at the Yellowtail field in the Stabroek Block.
He said this assessment will inform the size of the guarantee to be requested from Exxon.
According to the Yellowtail Permit, EEPGL has to submit to the Environmental Protection Agency, as soon as reasonably practicable, and upon its request, a series of documents and evidence to ensure the State is well protected from being saddled with oil spill costs. These include Environmental Liability Insurance policies in both a printed and electronic copy, a summary of the Environmental Liability Insurance policies detailing the insurer, the type of insurance, the amount of coverage provided by each policy, key terms of the insurance policies, what types of environmental damage the policies cover, what types of environmental damage the policies do not cover, and the duration of each policy, evidence that the insurer is authorised to provide the insurance in Guyana, evidence of authorisation of the institution or parent (insurers) to provide insurance, and evidence of the insurer’s financial strength and market grades.
EEPGL must also, as soon as is reasonably practicable, provide from the parent company or affiliate companies of permit holder and its co-venturers, one or more legally binding agreements to the agency, in which the parent company or affiliate companies of the permit holder and its co-venturers, undertake to provide adequate financial resources to pay or satisfy their respective environmental obligations regarding the Stabroek Block.
Kaieteur News previously reported that Exxon and government were in talks about a US$2B parent guarantee for oil spill coverage. This would be in addition to the EEPGL’s provision of a policy totalling US$600M per occurrence of an oil spill.
The EPA had said it would not sign off on the US$2B until justification was provided. Parsram had said in 2022 that Exxon was asked to explain how it arrived at the proposed sum.
He had said, “…We, as the regulator, are working with them and questioning what makes sense and what doesn’t and laying out what we expect…I am not saying the US$2B would not be accepted but you cannot come up with a figure out of the air, you have to show me how you arrived at that figure…”
He said these discussions are still ongoing.
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