Draft oil law fails to hook companies to full liability coverage – Opposition

Jun 27, 2023 ExxonMobil, News, Oil & Gas

---

Kaieteur News – The Leader of the Opposition, Aubrey Norton on Monday released initial comments on the proposed Petroleum Activities Bill, describing the draft document as a missed opportunity to ensure oil companies take full responsibility for a spill.

In a statement to the press, the Opposition pointed out, “The Bill is muted on insurance and liability issues, despite the serious legal disputes that have arisen in our courts.” The party was referring to the ongoing matter in Guyana’s Appeal Court where ExxonMobil has told the Court it would not be able to provide an unlimited parent guarantee to cover the costs of a spill caused by their exploration and production activities in the Stabroek Block. High Court Judge, Justice Sandil Kissoon had ruled that Esso Exploration and Production Guyana Limited (EEPGL), the Operator of the Stabroek Block was in breach of its Permit for the Liza One project when it failed to provide an unlimited parent company guarantee to cover the costs of a spill above its limited US$600 million insurance.

To this end, the Opposition said, “This Bill potentially provides a good opportunity for us to tighten Guyana’s legislative framework so that citizens can be confident that the company assumes full liability for all environmental and industrial damages and accidents, including oil spills, both in response to and outside of all claims and demands.” In prefacing its comments on the draft legislation, the political group noted that it is dismayed by how unresponsive the government is with regards to the experience gained and lessons learnt from the problems and challenges that have engulfed the local oil and gas industry over the last few years.

The Opposition said it will speak in greater detail on the Bill when it is presented to the National Assembly. In addition to its concerns on the lack of provisions in the legislation to hold oil companies to account for oil spills and other disasters, the Opposition also raised seven other issues in its initial comments.

A review of the draft Act done by Kaieteur News found that the Bill at Section 92 proposes licensees to keep the State indemnified at all times against all actions, claims and demands that may be brought or made against State by reason of any action, omission or failure to act by the licensee in the exercise or purported exercise of the rights of the company.

Be that as it may, the proposed legislation also in Section 83, which speaks to compensation is vague as to the responsibilities of the oil companies that will be operating offshore.  The draft Bill merely speaks to a parcel of land that may be damaged during the course of exploration or production activities. According to Section 83 (1) “Where, in the course of exploration or production operations in any parcel of land in the licence area, any damage is caused or done to the parcel of land, or to any cultivation or building thereon, as a result of those operations, the licensee shall be liable to pay fair and reasonable compensation to the holder of any right, title or interest in or over that parcel of land in accordance with his right, title or interest.”

It goes on to explain that any compensation “…shall be such sum as may be agreed to between the licensee and the person entitled to receive the compensation…” Meanwhile, if no agreement can be arrived at between the two, the proposed legislation states that the High Court will determine the payment on application by the Licensee or person entitled to received compensation.

On June 19, 2023 the Ministry of Natural Resources released the draft Petroleum Activities Bill for public consultation. The Petroleum Activities Bill replaces the Petroleum (Exploration and Production) Act 1986. The ministry explained in a statement that the bill introduces significant improvements and safeguards related to safety, emergency response, cross border unitization, supervision and monitoring requirements and authorizes the Minister to prescribe regulations about key administrative and operational aspects of exploration and production activities.

The Petroleum Activities Bill is expected to be supplemented by a set of regulations that will follow in the coming months and provide the government the necessary toolbox for responsible and efficient management of the petroleum activities within the Guyanese economy. The two weeks consultation on the draft document is still ongoing and is available at the following websites: www.nre.gov.gy and www.petroluem.gov.gy.

All comments should be sent via email to [email protected] during the period and by close of business on Monday, 3rd July 2023.

---

• draft, legislation, liability, oil, spill

---