When oil spill occurs Exxon fights ‘tooth and nail’ for their interest – Financial Analyst

Jun 20, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – Amid the push for unlimited parent company from ExxonMobil, International Financial Analyst, Tom Sanzillo has recently said that the American oil giant fights aggressively and pursues its interests in places where oil spills have occurred.

Sanzillo is the Director of Financial Analysis for the Institute for Energy Economics and Financial Analysis (IEEFA), which examines issues related to energy markets, trends and policies. IEEFA’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. Sanzillo’s analysis is in light of the decision for ExxonMobil to put up US$2 billion in affiliate guarantees, while the appeal challenging the court order that ExxonMobil must provide Guyana with unlimited parent company guarantee come up for hearing on the merits of the appeal. In the meantime, the oil company is allowed to continue its day-to-day operation.

The oil company and the Guyana Environmental Protection Agency are the ones challenging the May 14, decision by High Court Judge, Justice Sandil Kissoon. In his analysis that was published last Wednesday, Sanzillo questioned the rationale behind a US$2 billion affiliates, reminding that the 2010 Deepwater Horizon spill in the Gulf of Mexico cost British Petroleum (BP) and its insurers US$70 billion. He added that the IEEFA reviewed the value of the economies of several neighbouring islands and coastal countries identified in the environmental impact assessment in the path of a plume and found more than US$140 billion in economic activity at risk.

“Having been privy to negotiations with ExxonMobil on oil spills in my professional career, I know they are hard-fought,” Sanzillo noted. He highlighted that when it comes to oil spill disasters Exxon aggressively pursues its interests. To this end, he highlighted like what happened in the 1990 New York Harbor oil spill involving Exxon.

On January 1 and 2, 1990, #2 fuel oil spilled from the Exxon Bayway facility’s underwater pipeline in Linden, New Jersey. Approximately 567,000 gallons were released directly into the Arthur Kill, a saltwater channel between New Jersey and Staten Island. New York Times reported, “A long-fought legal battle to recover (US) $8.9 billion in damages from Exxon Mobil Corporation for the contamination and loss of use of more than 1,500 acres of wetlands, marshes, meadows and waters in northern New Jersey has been quietly settled by the state for around (US) $250 million.”

Additionally, Kaieteur News had highlighted the 1980’s Exxon Valdez oil spill, which ended with the oil giant beating down a US$5 billion court judgment for fishermen, natives, landowners to US$507 million.

On March 24, 1989, an oil tanker owned by ExxonMobil Corporation and dubbed the “Exxon Valdez” ran aground in a body of water in the Gulf of Alaska. It was heading to Long Beach, California with over 50 million barrels of oil but had hit a well-known navigation hazard in Alaska’s waters. The impact of the collision tore open the ship’s hull, causing some 11 million gallons of crude oil to spill into the ecologically sensitive location. At the time, it was the largest single oil spill in U.S. waters. Initial attempts to contain the oil failed, and in the months that followed, the oil slick spread, eventually blackening about 1,300 miles of Alaska’s coastline. It was, and still is, regarded as one of the largest environmental disasters in U.S. history. The case is often cited by environmentalists here and abroad as a cautionary tale of how risky oil operations can be and for Guyana to be on its guard. But what this case also highlights is the litigative power of ExxonMobil which is also the operator of Guyana’s Stabroek Block. The oil giant indeed faced numerous lawsuits for the 1989 spill. But it did not roll over and accept all judgments handed down for compensation to those affected. The state of Alaska had sued Exxon over the spill, and the federal government indicted the company for violating the Clean Water Act. The oil company was forced to dish out US$1 billion in settlements to the state and federal governments, and US$300 million in voluntary settlements with private parties.

A lawsuit was also filed against ExxonMobil on behalf of more than 32,000 fishermen, native Alaskans and landowners, resulting in an award of US$5 billion in punitive damages. Exxon’s full strength in the courts was demonstrated here. In 2008, it appealed the case and got the judgment reduced to $507.5 million.  Importantly, the case would drag out for 26 years, showing just how tedious and expensive environmental litigation is. In fact, the case came to a close in October, 2015 in a federal district court in downtown Anchorage, Alaska.

Notably, during one of his recent press conferences, Vice President Bharrat Jagdeo had stated that the Government of Guyana (GOG) will take ExxonMobil to court for compensation in event of an oil spill. The VP was asked, in the event of an oil spill offshore Guyana, what will the Government do to ensure that Guyanese do not have to foot the bill. He responded by explaining that looking at what has happened globally with other countries when it comes to oil spill, most of the US-billions of dollars that countries get are from taking the oil companies to court and winning the case. He continued: “they didn’t come because the companies are voluntary, even in the US (United States of America) …and in the UK (United Kingdom). So I see figures quoted (US) $85B and (US) $50B and if you look at it, it wasn’t for the cleaning up of the spill but the compensation and a lot of those didn’t originate because of guarantees they emerge from court cases.”

The Vice President explained that he expects there would be litigations and that is how he anticipates it would be dealt with. Jagdeo even admitted that oil and gas companies are not altruistic. “They are not in this for the good of mankind they are here to make money and it’s as simple as that they come to make money from the country,” he said. Guyana has been pumping oil since December 2019, in the prolific Stabroek Block.  ExxonMobil Corporation’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), is the operator of that block which has an estimated 11 billion barrels of oil. Over the years, Kaieteur News has highlighted the plight many countries face to get oil and gas companies to compensate them for losses suffered by citizens and damage to their environments due to oil spills.

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• ExxonMobil, interest, International Financial Analyst, oil spill, Tom Sanzillo

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