Hess Boss tells US conference Pres. Ail assured him of stay in Justice Kissoon’s ruling before Court of Appeal handed down decision

Jun 23, 2023 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

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…says “the President was very emphatic that a stay would be put in place” and so it was…

Kaieteur News – Chief Executive Officer (CEO) of Hess Corporation, John Hess, disclosed yesterday that President, Irfaan Ali was very emphatic that a stay of execution would have been issued on an order for unlimited guarantee to cover oil spills, and so it was.

Hess made this disclosure at the J.P. Morgan 2023 Energy, Power & Renewables Conference.  Hess’ comments would likely raise eyebrows in the legal circle here and undermine the independence of the judiciary, which Vice President, Bharrat Jagdeo is on record saying that it should be predictable.

At the conference, Hess was asked for an update on the case that was brought by two Guyanese men last year. The citizens were of the belief that the ExxonMobil-led consortium was in breach of its financial assurance provisions for the Liza Phase One Project. A high court ruling subsequently noted that Exxon and partners must be on the hook for all oil spill costs in the Stabroek Block and therefore called for an unlimited parent and/or affiliate company guarantee by June 10, 2023.

ExxonMobil through its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) as well as the Environmental Protection Agency (EPA), subsequently secured a stay of execution of the order pending full determination of its appeal. Hess in speaking on the project yesterday was keen to note that both the oil companies as well as the government disagreed with the position of the two applicants as well as the High Court judgment ordering unlimited financial coverage. The official said, “…I can tell you, the President was very emphatic that a stay would be put in place that would have no impact on production. The stay was put in place. There is no impact on production.” The Hess boss added, “and I think this is just a case of the judge not understanding what the petroleum legislation was or the petroleum requirements of our production programmes were, and I think that matter has been put to bed. There was a lot of noise about it, but it was basically noise.”

Kaieteur News previously reported that Exxon and its partners have since lodged a US$2B affiliate guarantee with the EPA as this was a condition of the stay of execution being granted. This complements the US$600M per occurrence insurance policy for the block. Exxon has also argued that it has an asset base that is worth more than US$21B against which it can activate credit facilities for further cash if needed. Company executives have maintained that Guyanese have nothing to worry about since several oil spill safeguards are in place such as a capping stack. That piece of equipment can be used to immediately close off a well that is bleeding oil. Despite their assurances, stakeholders have demanded greater financial provisions be put in place.

Appellate Judge Rishi Persaud on June 8, 2023 had put on hold the suspension order issued by High Court Judge, Sandil Kissoon against ExxonMobil’s Esso Exploration and Product Limited (EEPGL) to provide Guyana with unlimited parent company guarantee by June 10, 2023 or its licence will be suspended. The oil major had indicated it would not have been able to provide such a guarantee and the Environmental Protection Agency (EPA) and the oil company appealed the matter. During the appeal the EPA had asked for a stay of the suspension order as it could be disastrous to the country as well as the oil company. After hearing arguments from both sides, Justice Persaud delivered his judgment on June 8. The stay of the suspension order will be in force until the hearing and determination of the full appeal case. The appeal case is premised on the decision of Justice Kissoon in an application filed in the High Court on September 13 by Attorneys Seenath Jairam, SC, Melinda Janki, and Abiola Wong-Inniss. In the case, Guyanese activists, Godfrey Whyte and Frederick Collins said that their resort to the court is to make sure that the company takes full financial responsibility in case of harm, loss, and damage to the environment.

They noted that, “an oil spill would be devastating for our country and Region as many Guyanese and Caribbean peoples depend on the ocean for their livelihoods. That is why we have decided that the time has come to take matters to the court for relief.” Kissoon had handed down a strongly worded decision as to why the oil subsidiary must provide adequate financial assurance by its parent company Exxon Mobil to cater for all the damages to the environment in the event of a blowout or massive spill in the Guyana oil field.

According to Justice Kissoon, the EPA as the statutory regulatory body failed to enforce condition 14 of the permit which it granted to the oil subsidiary, Esso which stipulates the need for an unlimited liability Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee, to cover and keep  protected  the Government of Guyana and the Agency against all such environmental obligations within the Stabroek block, together with Environmental liability insurance as is customary in international petroleum industry, in accordance with the conditions listed in the permit from an insurance company standing and repute that equates to Grade A Plus as envisaged by Condition 14:05  of the permit. A failure to comply with the order, the judge said would have resulted in the permit being suspended. Thursday’s decision touched only on the suspension order, which has since been put on hold, but the substantive case will go forward and is to be heard by the full Court of Appeal panel.

In its appeal, the EPA had said that the trial court erred in law in interpretation, consideration and application of the combined effect of Clause 14 of the Environmental Permit issued to EEPGL, and erroneously concluded that the financial assurance must be provided by EEPGL. The EPA argued that the trial court erred in law and misconstrued the Environmental Protection Act and its Regulations to determine that the Appellant, a statutory body had specific statutory powers which in fact it did not.

The EPA argued too that the trial court erred in law and misconstrued the substance and effect and wrongly ascribed to it an interpretation superior to the Environmental Protection Act and thereby ascribed meaning to it which was expressly contrary to the specific provisions of the said Act and its Regulations. Further, the EPA submitted that the trial court erred in law in directing and determining the exact manner of the exercise of the discretion of the EPA in a manner contrary to established law and practice. In effect the EPA said that the trial court substituted its own discretion as the decision of the EPA when the Agency at all material times, had exercised its discretion and acted well within it statutory and regulatory powers. As a result, the EPA had applied for a stay of execution of the judgment of the Court as it contends that irreparable harm would be suffered by the nation’s economy.

Meanwhile, Director of the EPA, Kemraj Parsram in an affidavit had said that he was advised that the grave disruption to the national economy coupled with the good prospect of success of the Appeal was sufficient grounds for the court to grant of a stay of execution of the order and judgment of the High Court. Parsram said that the High Court orders are quite coercive; including its mandate to the EPA to serve a statutory notice on EEPGL, and if no adequate response is received then the permit stands suspended. According to the EPA Head, the judgment will have severe consequences and the direction of the Court has the effect of removing entirely the discretion of the agency. He noted Guyana as a nation now earns billions of dollars annually from the petroleum activities conducted on the Liza 1 and Liza 2 fields; both are subject to the permit suspension or cancellation which will have a catastrophic effect on national funds for development and also the private sector which supports the activities on the said Liza 1 and 2 fields.

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• Chief Executive Officer (CEO), Director, EPA, Hess Corporation, Kemraj Parsram

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