Exxon dodging of unlimited parent company guarantee places all Guyanese in financial danger – Dr. Vincent Adams

Jun 12, 2023 News

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Kaieteur News – The fact that ExxonMobil Guyana is dodging its responsibility in providing adequate financial protection for Guyana in the event of a catastrophic oil spill places every Guyanese tax payer in financial danger. The fact that the company is also producing more oil at its Liza well beyond what is scientifically safe not only increases the chances of a mishap, but more importantly, increases the risk to Guyanese pockets as well as their environment.

This is according to US trained oil and gas expert Dr. Vincent Adams who reiterated the need for Guyanese to understand both the environmental and financial risks associated with the oil giant’s refusal to provide the nation with a written assurance that it will cover all spills above and beyond what its locally formed limited liability company Esso Exploration & Production Guyana Limited (EEPGL), could manage.

More recently, EEPGL President, Alistair Routledge, sought to downplay the risk of Guyana having its oil contaminating at least 12 tourism based Caribbean countries despite its Environmental Impact Assessment (EIA) being pellucid on the at-risk nations in the path of the moving spill. Exxon has pledged an unfinalised US$2B as the parent company guarantees completely dismissing costs that are associated with external liabilities since the US$2B is only catered for in-country damages. During a court ruling last week on the issue  of unlimited parent company guarantee, Appellate Judge, Rishi Persaud ordered the company provide the US$2B guarantee within 10 days.

The EEPGL President had  somewhat played down Guyana’s financial obligation to its affected neighbours claiming that such a matter is a “worst case scenario” and that all precautions are being taken to ensure that Guyana does not have a disastrous outcome.

Adams, the country’s former Environmental Protection Agency (EPA) head in knocking Routledge’s position reminded that EIAs serve a very real purpose in assessing oil spill impact and should not be downplayed, especially when the oil operators are not producing within the stipulated safe limit and are failing to offer adequate financial protection considering the potential dangers.

“The EIA, that information is not what people are making up as far as where the spill is gonna go,” Adams urged. He said that Exxon paid international consultants to conduct the very EIA which highlights the danger to Guyana and her neighbours but they are dismissing it, “… and are going against the rule of law,” the oil and gas regulator posited. He charged that the EEPGL boss in his statement is saying basically that the company will continue to ignore the EIA as they are already doing by operating above the safe production level. “They are already doing that by the way (ignoring the EIA) by going above the safe operating limit that is in the EIA. That is, they are increasing the probability of a spill which makes it absolutely dangerous. You never go against an EIA safe operating limit,” Adams insisted. He said that Liza 1 safe operating limit is 120 barrels of oil per day while the company is producing 155 barrels per day “which means you are increasing the probability (of a spill), and on the other end, you don’t want to cover it.”

The whole point of the oil spill insurance, Adams continued, is to keep Guyana “indemnified” in that the oil companies that are making massive profits from the Stabroek Block must also pick up all tabs associated with a spill, big or small. Given the large amounts of oil being harvested, the speed at which production is taking place and the lack of institutional power in managing the local wealth, Adams submitted that it is only fair that Guyana seeks protection of its people and environment with the oil company providing same. Referring to the notable Gulf of Mexico, Macando oil spill in 2010, Adams said that disaster which became a worst-case scenario was unforeseen; costing BP a whopping sum of over US$140B.

“This is what Guyanese people need to understand that the Macando spill cost US$145B so when they use the US$600M and the proposed US$2B parent company sum, who is going to cover the more than US$140B remaining? Our national budget is between two and three billion, we will go bankrupt, and not only that it’s the 12 or 14 Caribbean countries that will be affected, washing away their fishing and tourism industry, and it will be all our fault.” Adams warned that inadequate financial oil spill coverage without a clearly written  and signed assurance from ExxonMobil accepting all oil spill liability is a sure way of bankrupting the country and leaving it open to litigation from affected parties, further sinking it to financial doom. Apart from our neighbours, Adams said the oil will also head up the Demerara and Berbice rivers with the tide, ruining internal waterways.

Adams said that Guyanese must be fully aware also that what Exxon is doing in the country is not the way they operate in the United States. He said for instance, in the US all Exxon’s operations are handled by Exxon so there is no “child company” as they are utilising in Guyana. “They formed a limited liability child company, placed it in the Bahamas- a tax haven, and have it operating here in Guyana,” Adams explained. This company, he continued, has limited assets which in fact belong to Guyana since the Stabroek operation is already being financed with the money being made off the Guyanese owned oil. Adams said that when Exxon and other big oil operators come to US regulators, “they jump when we say and ask how high.” To that, the regulator said it is unreal the way Guyana is allowing Exxon to do as they please.

Adams reminded that the parent company guarantee which Exxon must sign will cost “absolutely nothing” until an oil spill occurs. He said it is disingenuous for the company’s leaders to pretend that the parent company guarantee will financially set back the company in any way as it cost “not a cent.” He said even if Exxon pledges one US dollar as insurance, it really does not matter since the company would have given its written assurance that in the conduct of its business whatever liability comes about, they will be totally responsible. As Exxon, its US and Chinese counterparts, Hess and China National Offshore Oil Corporation (CNOOC) respectively are benefiting the most from the lucrative Stabroek oil arrangement, Adams said it is only “fair and balanced” that the partners take responsibility for their operation. He said that prior to the Guyana project, ExxonMobil was on a downward trajectory. As is repeatedly stated by the HESS partner, Guyana has been the lifeline for the once struggling companies. The country has been more than promising, and so important to the oil companies that they have dropped several of their less productive projects around the world and has significantly zoomed in on the Guyana wealth.

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• Adams, Alistair Routledge, EEPGL President, Environmental Impact Assessment, the country's former

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