Exxon’s US$600M insurance not in keeping with industry norm, never scrutinized by EPA - Justice Kissoon’s Ruling

Exxon’s US$600M insurance not in keeping with industry norm, never scrutinized by EPA – Justice Kissoon’s Ruling

May 09, 2023 News

Kaieteur News – A landmark ruling by High Court Judge, Justice Sandil Kissoon has found that the country does not have an insurance package from Exxon’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) that meets international standards.

Justice Kissoon made this conclusion after reviewing documents presented to his court in a case filed by two Guyanese applicants last year September. In that case, two citizens called for the court to examine EEPGL’s compliance with the insurance provisions of its Liza Phase One Permit.

The court found EEPGL to be in breach of the provisions which called for an unlimited parent guarantee agreement. EEPGL had also sought to convince the court that Guyana was in receipt of a credible insurance package from ANCON UK Ltd., an ExxonMobil subsidiary. The Energy Package Policy covers the Liza Phase 1 and Phase 2 Projects.

Justice Kissoon was keen to note that such a policy, which is noted in the press to be US$600M per oil spill event, does not satisfy the stipulation and obligation set out at Condition 14:5 of the Environmental Permit (Renewed and issued on May 31, 2022). Justice Kissoon said the permit imposes an express and specific obligation on EEPGL to obtain environmental liability insurance of a certain criteria.

Justice Kissoon said, “It does not constitute what is considered environmental liability insurance ‘as is customary in the international petroleum industry’ and for the petroleum production operations under this Permit. Further, the insurance has not been obtained by the Permit Holder from an insurance company of standing that equates to Grade A Plus.”

The Judge further noted that Condition 14.05 of the permit stipulates as to the type of insurance mandated under this Permit, i.e. “environmental liability insurance of such type and such amount as is customary in the international Petroleum Industry for Petroleum Operations in relation to this Permit… It shall include but may not be limited to insurance in respect of:

Loss or damage to all assets used in the Project
Environmental damage caused in the course of the Project for which EEPGL will be jointly and severally held responsible,
Loss or damage to property or bodily injury suffered by any third party in the course of the Project for which EEPGL is liable,
The cost of removal of wreckage and clean-up operations required as a result of an accident occurring in the course of permitted activities
EEPGL’s liability to its employees engaged in the Project
Any other requirements made by the Agency

Justice Kissoon said too that the EPA has failed and/or omitted to take any step to hire an independent insurance consultant to guide its actions and conduct as it relates to the quality, type and nature of the insurance demanded by the permit.

He said, “The Agency has further abrogated its function by simply issuing a letter to Esso and to acknowledge receipt of the copy of the insurance. The business of the Agency is not a clerical one.”

Kaieteur News previously reported that the EPA has up to June 10, 2023 to secure from EEPGL an unlimited liability Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee to keep indemnified the Government of Guyana and the EPA against all oil spill costs for the Stabroek Block. The Liza One Permit would be suspended if this is not satisfied.

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EEPGL, Exploration, Exxon’s affiliate, High Court Judge, insurance package, Justice Sandil Kissoon, Liza Phase One Permit

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