Latest update November 15th, 2024 1:00 AM
US$2B parent guarantee only to cover oil spill damage to Guyana – Exxon Guyana
– 12 other Caribbean countries that could be affected are not covered
Kaieteur News – The US$2B parent guarantee Guyana is poised to receive from ExxonMobil Corporation for the Stabroek Block only covers expenses associated with an oil spill within these borders. The determination of that sum did not consider ensuing liabilities of potential impacts on 12 Caribbean territories. Though that worst-case scenario is outlined in the Environmental Impact Assessment (EIA) for the Liza Phase One Project, Alistair Routledge President of ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL) said it is not considered as a “credible” case, especially when one considers the extensive mitigative and preventative measures in place for the Stabroek Block.
Exxon Guyana Head, Alistair Routledge
During a press conference last week, Routledge said the US$2B guarantee to be supplied by EEPGL’s parent was determined by an independent consultant. The bill for that service was handled by EEPGL. Routledge said too that the sum was arrived at taking into consideration all “credible and reasonable costs” that are likely to arise during an unmitigated oil spill scenario at the Liza Phase One Project which is producing about 155,000 barrels of oil per day.
While the Liza Phase One EIA includes examples showing that oil can flow into the Caribbean, affecting a dozen of Guyana’s counterparts such as Trinidad and Tobago, Routledge said, “That is a worst-case scenario and not a credible case.” He said it is true the company is required to examine all scenarios. He said however that this is done with the aim of informing all the protective and mitigative measures that ought to be adopted. Routledge stressed that the basis of the parent guarantee estimate has to reflect what is reasonably credible.
Expounding further he said, “So it is the worst credible case [one must consider], given the investments made [by the partners in the block] on prevention and mitigation. It is important that you reflect that in that decision-making.”
He also noted that the consultant arrived at the figure taking into account the financial assurance standards used in Australia, adding that another study is in the pipeline for this matter. That study he said will incorporate the UK standards on parent guarantee coverage. Routledge said, “We agreed that we would revisit the value of that assurance if the study supports it.”
Notably, Routledge did not respond to Kaieteur News’ question on whether the company is willing to make public, the data and information used by the independent consultant who found that US$2B is a sufficient parent guarantee for the Stabroek Block.
Routledge also noted that the documents pertaining to the US$2B insurance guarantee are being finalized with the other partners on the block, namely Hess Corporation and CNOOC, and will soon be provided to the Environmental Protection Agency (EPA).
He also contended that US$2B parent guarantee is in line with the demands of the Liza Phase One Environmental Permit, though a court ruling has found otherwise.
That ruling was handed down on May 3, 2023 by Justice Sandil Kissoon in relation to a case filed last September by two Guyanese. Justice Kissoon had disregarded copies of unsigned documents that were presented to him on the US$2B parent guarantee. He categorically stated in his ruling that the Liza Phase One Environmental Permit calls unequivocally for an unlimited parent guarantee agreement, adding that anything less leaves EEPGL and its partners in breach of the permit.
He has since given EEPGL as well as the EPA to comply with the provisions of the permit by June 10 or see its suspension. Both parties have since appealed the case, the judgment for which is expected on May 29.
Internationally, the ruling has had a significant impact on Exxon’s stock price. It plunged by 12 percent in recent weeks to US$105.
ExxonMobil shareholders have also taken note of the ruling and are poised to challenge the oil giant to come clean about the potential risks and liabilities of its operations which could affect not only Guyana but 12 other Caribbean nations. That challenge is expected to manifest by way of two proposals come May 31 at Exxon’s Annual Shareholders Meeting.
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