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Just some thoughts on oil and gas insurance

Jun 07, 2023 Letters

Dear Editor,

The Supreme Court decision of ‘Collins, Whyte and others v the Attorney General of Guyana’, the Environmental Protection Agency and Esso Exploration and Production Guyana Ltd. has many ramifications for local businesses and local content planning.

The decision, while reaffirming judicial commitment to the environment, is heavily criticised for failing to account for certain deficits in the legal and fiscal infrastructure governing the oil and gas industry of Guyana. This lacuna of consideration in the decision, essentially is the primary basis of the pending appeal in this case.

The insurance sector of Guyana was historically centered on vehicles, home, fire, cargo and merchandise protection. With the discovery of oil and gas of commercial quantity in 2015, this industry was poised to play a vital role in the provision of indemnity of different class. Seven years later, and in the advent of a local content regime, the insurance sector is still reliant on a regulatory framework promulgated since 1998, when bauxite, gold, timber and sugar were among the main commodities of trade.

The total insurance bill for the entirety of the Stabroek Block productive areas is said to be US$900 million. The problem faced by Guyana is that the local insurance companies and the legal framework are not able to provide the standard of service of the world’s leading players in this field to ExxonMobil, which is, the world’s largest traded international O&G company.

The insurance market for oil and gas indemnity is dominated by big players such as AIG, Travelers, Zurich, Allianz, Chubb and Liberty Mutual. The internal standards by which such companies manage insurance contracts and claims, are far ahead of the extant Insurance laws applicable in Guyana.

Fifty-six pages of legal analysis and reasoning, led to what can be considered a sound decision of the Hon. Mr. Justice Kissoon; and arguably is ahead of its time. Notably, key players in Guyana, together with the country’s fiscal and legal frameworks are not in sync with the reality and commercial demands of the terms of the Stabroek Agreement, and the instant legal instrument issued pursuant thereto.

Kevin Morgan 

Former Lawyer

Petroleum Programme 

Government of Guyana 

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