EPA’s ‘incestuous’ relationship with Exxon raises concerns among its shareholders

May 21, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – The Government of Guyana has a relationship with ExxonMobil’s local subsidiary which has been described as “cooperative.” This can also be seen in how Exxon relates with government regulators like the Environmental Protection Agency (EPA). However, this sort of kinship has resulted in one Exxon shareholder raising concerns about whether it could interfere with proper regulation of the Stabroek Block projects.

A report from The Guardian, a UK news entity, indicated that two shareholder resolutions were filed in the aftermath of the High Court ruling ordering the provision of an unlimited guarantee by ExxonMobil. One of the resolutions, from Anna Marie Lyles, Ph.D, indicated worry that there could be a loss of trust in ExxonMobil, arising from operational and reputational issues connected to legal action brought against the company in Guyana.

Natural Resources Minister, Vickram Bharrat and Exxon Guyana Head, Alistair Routledge during the recent signing of the licence for the fifth project

“Some of the litigation in Guyana concerns the risk of a blow out or other accident. Media reports indicate that Esso (Exploration and Production Guyana Limited) is operating its floating production storage and offloading (FPSO) vessels above their safety limits, about which the former Head of Guyana’s Environmental Protection Agency (EPA) [Dr. Vincent Adams] has expressed serious concerns (also noting this would not be possible in the US, where he worked for the Department of Energy for many years),” the shareholder said. It was also noted that Exxon has dismissed concerns about its Guyana operations by emphasizing how “cooperatively” it works with the country’s EPA. While Exxon management may prefer this kind of relationship, the shareholder said “safe operations require robust enforcement of rules and regulations.”

The EPA’s “cooperative” manner of dealing with Exxon is demonstrated, for example, in how it has treated with higher than expected production at the Liza Phase One project. Originally designed to produce at 100,000 bpd with safe sustainment at peaks of 120,000 bpd, the Liza Phase 1 environmental impact assessment said oil production can go as high as 144,000 bpd. However, Liza Phase 1’s production since debottlenecking in 2022 has surpassed this, producing over 150,000 bpd.

When the concern about production was raised with ExxonMobil’s Country Manager, Alistair Routledge on Friday, he said the current levels are safe. He explained that debottlenecking can sometimes be pursued to increase production at a project, but that these high production levels are usually only sustained in the early days of the project.

In summary, what the shareholder worries about, is that if the EPA is indeed allowing Exxon to contravene its environmental permits in the spirit of cooperation, this could open Exxon to being sued more.

ExxonMobil Guyana Head, Alistair Routledge and EPA Head, Kemraj Parsram during the recent signing of the environmental permit for ExxonMobil’s fifth project

One journalist asked Routledge on Friday whether Exxon tells its shareholders that the government is helping them. But the official did not agree that the government is “helping” Exxon.

He said, “What I would say is, we don’t feel the government is helping us. We feel the government is creating an environment that is attractive to investors to come to Guyana and make those investments.”

He said Guyana is a developing country which has a risk profile from the past that has not attracted investors. He believes ExxonMobil has been acting as a weather vane for other international investors as to whether they should come, based on how much it is willing to invest and how it is being treated.

“You know I don’t think the government is specifically helping us. I think the government is thoughtful about how it attracts international investment,” Routledge stressed.

The nature of the relationship between Exxon and the EPA, as well as the wider government, would also be of concern to citizens of Guyana. The High Court recently ruled that Exxon is in breach of its environmental permit for the Liza Phase One project, and that the EPA is in dereliction of its duty, when it comes to protections that should be in place in case of a devastating oil spill. The EPA and ExxonMobil have both decided to appeal the High Court’s ruling. Stakeholders believe such a joint action gives much to think about!

The resolution which describes the relationship between the EPA and Exxon as “cooperative” can be accessed here – https://investor.exxonmobil.com/sec-filings/all-sec-filings/content/0001214659-23-006093/0001214659-23-006093.pdf.

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Alistair Routledge, environmental, Exxon Guyana Head, Natural Resources Minister, Vickram Bharrat

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