Environmental Law prevents Guyana from demanding unlimited guarantee from Exxon – Nandlall 

Apr 26, 2024 News

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Kaieteur News – Attorney General and Minister of Legal Affairs, Anil Nandlall, this past week doubled down on government’s apprehension, to call on ExxonMobil Guyana’s parent company, for an unlimited insurance guarantee, saying it is prevented by the Environmental Protection Act.

Nandlall gave his position in response to Alliance For Change’s (AFC) Leader, Khemraj Ramjattan, who at a recent press engagement lambasted the restrictions on insurance as spelled out in the recent permit issued to ExxonMobil Guyana for the development of its sixth oil field in the Stabroek Block—Whiptail. He gave his views this past week during his weekly ‘Issues in the News’ broadcast, where in defending the insurance caps in the Permit, pointed to the limitations enshrined in the law. To this end, he pointed to Clause 30, of the Environmental Protection Act, which, provides for “financial assurance.’

In that legislation, it dictates that Financial Assurance would be taken to mean one or more connotations, one such being “cash specified in the environmental authorization.” Additionally, the legislation provides for financial assurance to also mean “a letter of credit from the bank, in the amount and terms specified in the environmental authorisation.” Furthermore, financial assurance under the act, can also be taken to mean, “a guarantee in the form, terms and amount specified in the environmental authorisation from any person whose long-term unsecured obligations are rated equally with a bank by an internationally recognized credit rating agency.”

Lastly, the law dictates financial assurance to also mean “a performance bond in the forms and terms specified in the environmental authorisation.”

Ramjattan in his earlier press engagement had publicly chastised what he termed inadequate protection in the permit saying it in fact spells doom and gloom for Guyana.

To this end, the Attorney General reiterated no insurance can be unlimited and was referenced the permit which stipulates that the sum of the estimate shall be of reasonably credible cost expenses and liabilities that may arise from any breach. As such, the Attorney General contends, “must it (insurance) not be based upon some reasonable estimate or credible cost; this language that is in the Whiptail permit, it was first in Payara, it was in Yellowtail it was in Urau and it is now in whiptail.”

Further defending the government’s position, he disclosed that the formulation of language in the permit was taken from an oil and gas directive published in the United Kingdom giving general guidelines for the oil and gas industry. He was adamant too, “it (language in the permit) was recommended to capture the essence of the Act (Law). Seeking to rubbish claims that the inclusion of the clause in the permit was meant to undermine the ruling of the High Court calling for unlimited insurance coverage, Nandall insists this regime does not exist any other place in the world.

He in fact, insists the law repeatedly specified amounts when it comes to the financial assurance and questioned rhetorically, “how can it be unlimited, it (the law) tells you in the amount specified.”

Speaking to other instances of “terms and amounts specified” the Minister of Legal Affairs was of the view, “in the face of those expressed language in the law; this is the environmental protection act, this is the law that requires the financial assurance; how can it be unlimited?”

ExxonMobil, the operator of Guyana’s prolific Stabroek Block was granted a Permit for a sixth deep-water development, Whiptail, on April 11, 2024 which includes a provision that will force Guyanese to fight for compensation from a spill in the Courts.

The Whiptail Permit makes it clear that the insurance and financial assurance provided by Exxon shall be “guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities that may arise from any breach of the Act and this Permit.”

As such, the assurance will not be a signed “unlimited guarantee” but will be capped at a specific sum.  Section 14.3 of the document goes on to note, “Liabilities are considered to include costs associated with responding to an incident, clean-up and remediation and monitoring. Such cumulative amount required is not expected to include costs which may be associated with compensation for loss and ongoing damage to other parties, and which are able to be pursued through civil proceedings.”

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• Alliance For Change’s (AFC) Leader, Anil Nandlall, Attorney General and Minister of Legal Affairs, governments, Khemraj Ramjattan

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