Oil spill could set back Guyana to the ‘ice age’

Jun 01, 2023 News

…Exxon’s US$2B parent guarantee is a drop in the ocean –T&T Senior Counsel tells Court of Appeal

Kaieteur News – If Guyana does not secure unlimited liability coverage for ExxonMobil’s oil operations in the Stabroek Block then it leaves itself at risk of being set back to the ice age in the event of an oil spill.

This was one of the key arguments presented yesterday by Senior Counsel, Seenath Jairam before Appellate Court Judge, Justice Rishi Persaud. Jairam appeared alongside Attorney-at-Law, Melinda Janki for Guyanese activists, Godfrey Whyte and Frederick Collins. Both gentlemen are responsible for bringing a case last year which saw Justice Sandil Kissoon issuing an order for unlimited parent/affiliate company guarantee for oil spills. The Environmental Protection Agency as well as Exxon’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) has up to June 10, 2023 to comply or face suspension of the Liza Phase One Permit. Both EPA and EEPGL appealed the judgment. Part of their appeal called for a stay of Justice Kissoon’s order until, the full case is heard by the Appellate Court. Yesterday, Justice Persaud heard oral arguments regarding the application for a stay.

During his submissions, Jairam said it is imperative that the order issued May 3, 2023 by Justice Kissoon be complied with since, “an oil spill could set back Guyana to the ice age.”

He said too that the law requires compliance with a ruling/order until it is set aside by the Higher Court. The Senior Counsel said therefore that the appeals by EPA and EEPGL should not be heard at all since the aim it appears, is to avoid compliance. Jairam also drew attention to the fact that EEPGL and the EPA could have asked the lower court for an extension of time for compliance. But they did not. Given this state of affairs, “We say they are in contempt and should not be heard,” the Senior Counsel stated.

Jairam further noted that it would not cost the EPA a cent to issue a notice to EEPGL for the parent guarantee to be provided, as instructed by the May 3 order. The EPA’s lawyer, Sanjeev Datadin at this point told the court that it was issued. Jairam challenged this, noting that no supporting evidence was provided to the court. Jairam also noted that no parent guarantee, and particularly, not even the US$2B parent guarantee that was recently negotiated between the EPA and EEPGL, has been provided to Guyana. Jairam said this still leaves EEPGL in breach of the permit which was renewed in 2022. He was keen to note that in any event, US$2B is an inadequate sum. Jairam said, “Accidents on the high seas cost billions upon billions, a US$2B (parent guarantee) would be a drop in the ocean…”

In the written submissions to the court, lawyers for Whyte and Collins noted EEPGL’s claim that if the Liza Phase One Permit is suspended, it is at risk of losing US$337.5M per month unless there is a stay. The respondents said, “Even if that claim could be substantiated, it is irrelevant. If Esso loses money it is a direct consequence of Esso’s own failure/refusal to comply with its permit and produce the financial assurance” as ordered by the court. They added, “Esso’s behavior is reminiscent to the mythical child who kills its parents then says help me, I am an orphan.”

The Liza Phase 1 is currently producing approximately 151,000 barrels of oil per day. Exxon has said it has more than US$21B in financial assets to cover for an oil spill event. This includes a US$600M per oil spill occurrence insurance policy, a US$2B parent guarantee for which documents are being finalized, and US$19B in assets.

Justice Persaud’s ruling on the case is expected to be issued before June 7, 2023.