Guyana Govt. joins fight against unlimited parent guarantee for oil spills

May 30, 2023 News

– hearing of joinder application, substantive case set for Wednesday

Kaieteur News – The Government of Guyana through Attorney General, Anil , SC has applied to join the appeal that the Environmental Protection Agency (EPA) made against a high court ruling that provides for the Esso Exploration and Production Guyana Limited (EEPGL), to give Guyana unlimited parent company guarantee for its oil drilling activities in the Stabroek block.

The case was scheduled to be heard before Justice Rishi Persaud on Monday but the matter had to be deferred as Mr. Sanjeev Datadin, the lead attorney for EPA did not show up for the virtual hearing. The Court learnt that Mr. Datadin was on his way back to Guyana following an overseas trip. As such, the case is scheduled to continue on Wednesday at 11:00 am

The Appeal Court has now scheduled the hearing of the joinder application as well as the substantive matter for Wednesday at 11:00 am.

In his May 3, 2023 ruling, Justice Sandil Kissoon had determined that EEPGL was in breach of its permit as it failed to furnish the country with an unlimited parent and/or affiliate guarantee for a potential oil spill in the Stabroek Block. The court ruled that in the absence of this guarantee, should there be a catastrophic oil spill, then the burden of those liabilities would rest on Guyanese. As such, the court gave EEPGL up to June 10, 2023 to comply or face the suspension of its permit.

The oil company in its appeal of the ruling told the Appeal Court that it could suffer a massive financial loss if the Liza One Permit is suspended. On May 15 when the matter was called for case management before the Appeal Court, Datadin had requested a Stay of Justice Kissoon’s Order but his request was refused.

Justice Persaud told Datadin that a stay of the order was not required as he intends to hand down his ruling prior to the June 10, 2023 deadline in which Exxon is required to supply the parent guarantee, to cover oil spill damages above the limited US$600 million insurance.

Had the stay been granted, it would have put a hold on Justice Kissoon’s May 3, 2023 order for the company to provide, within 30 days, an unlimited Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee, together with environmental liability insurance, as is customary in the international petroleum industry.

Two citizens, Frederick Collins and Godfrey Whyte had approached the court for a declaration that EEPGL was in breach of its Liza Phase One Permit which requires the provision of an unlimited parent guarantee.

It noted that the company has produced 151,000 barrels of crude petroleum per day for the year 2023 on average, through March 2023. It explained that “This is approximately 4.5Mn barrels per month…the most recent month’s average selling price for the Liza 1 petroleum was more than $US75 per barrel.”

“This means the monthly revenue loss for the Appellant Esso, the Co-venturers, and the State’s projected to be US$337.5m. This would amount to $US337.5m. per month or $US4b. per annum that would be forfeit for each year while the appeal is pending,” the company stated.

Further, EEPGL said that the Liza Petroleum Production Licence is for a limited term of time and [the] Appellant may be unable to recover lost production implicated by a suspension of the permit. As a result, EEPGL is therefore petitioning the Guyana Court of Appeal to reverse and/or set aside the whole of Justice Kissoon’s decision and to dismiss the case brought by litigants, Frederick Collins and Godfrey Whyte.