Oil Company must handle all costs without limitation for oil spills in Belize - Contract

Oil Company must handle all costs without limitation for oil spills in Belize – Contract

Nov 29, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Belize, one of the world’s smallest oil producers, does not leave anything to chance when it comes to protecting its people against the grave financial and environmental ramifications of an oil spill.

The CARICOM member state’s Production Sharing Agreement (PSA) with Belize Natural Energy (BNE) is a testament to its commitment to shield its people from any impending danger. This agreement, overseeing the daily production of approximately 5,000 barrels from two fields, mandates comprehensive coverage of all costs not addressed by standard insurance policies.

Under the PSA, BNE is required to maintain a diverse portfolio of insurances. These include: a Workmen’s Compensation Insurance, an Employer’s liability Insurance, Commercial General Liability Insurance with Bodily Injury (other than automobile), Pollution Liability which addresses sudden and accidental damage, Umbrella Liability or Excess Insurance which covers claims in excess of the underlying insurance, and an Automobile Liability.

BNE is also required to have in place, an Energy Exploration and Development Policy which addresses insurance for the damage caused by a well blowout, drilling, and other similar works.

The PSA also states that the oil company must indemnify, defend and hold the government harmless against claims, losses and damages, and without limitation, claims for loss or damage to property or injury or death to persons caused by or resulting from only petroleum operations conducted by or on behalf of the company.

In Guyana, the situation is quite different, especially as it pertains to the Stabroek Block which is operated by an ExxonMobil-led consortium. Guyana’s PSA with the Exxon group does not demand any of the forms of insurance obtained in the Belizean PSA.

Citizens over the years appealed to authorities to close this loophole, by demanding that there be a separate policy or agreement in place demanding full coverage of all costs.

The government has unfortunately refused to demand that ExxonMobil be tied to any policy of that nature. Thus far, the government has accepted a US$2B affiliate liability coverage for the Stabroek Block which measures 6.6 million acres. In that concession, Exxon has unlocked 11 billion barrels of oil. It also has permission to set up five projects which would produce approximately 3.2 billion barrels of oil. Each project also has a US$600M per occurrence insurance policy.

While regional and local stakeholders have urged the government to have ExxonMobil provide a parent company guarantee for the Stabroek Block which would cover all costs not handled by the US$2B or US$600M policy, the administration has insisted that it is more than enough. It has maintained this position, even though many of Exxon’s environmental reports have said that an oil spill from any of its projects could not only cause irreparable harm to Guyana’s coast but also devastate more than a dozen nearby nations.

The demand for financial coverage beyond the US$2B policy is currently engaging the attention of the Appellate Court. In the interim, numerous requests by Kaieteur News to see a copy of the US$2B policy Exxon submitted to authorities remain unanswered.

Belize, Belize Natural Energy (BNE), environmental, limitation, ramifications

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Oil Company must handle all costs without limitation for oil spills in Belize – Contract

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Oil Company must handle all costs without limitation for oil spills in Belize – Contract

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