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Guyana can end up fighting in Court for years to access US$2B lodged at registry – Ramjattan
Kaieteur News – The Government of Guyana (GoG) can fight for years in court to access the US$2B oil spill guarantee lodged by the Stabroek Block Co-Venturers, ExxonMobil, Hess and CNOOC, Attorney-at-Law, Khemraj Ramjattan has said.
Attorney-at-Law, Khemraj Ramjattan
Following his preliminary analysis of the document, Ramjattan said the terms of the contract stipulates “In any suit brought by the Beneficiary (GoG) against the Guarantor to enforce its obligations under this Guarantee and Indemnity Agreement, the Guarantor shall be entitled to assert any defense (legal, contractual, or otherwise) that would be available to Hess if an action had been brought by Beneficiary against Hess.”
It must be noted that each Co-Venturer has contributed to the US$2B guarantee, relative to its participating interest in the Stabroek Block.
ExxonMobil is the operator of the oil rich acreage with a 45% interest, while Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.
Jamestown Insurance Company Limited is the Guarantor for Hess; while CNOOC Limited, a company organized in Hong Kong and Exxon Equity Holding Company is the Guarantor for CNOOC and Exxon, respectively.
The document makes it clear that, “The Guarantor shall be entitled to a defense that the Environmental Obligations claimed to be in Default has been indefeasibly paid or performed and, if any of Hess’ Environmental Obligations shall have been indefeasibly paid or performed, the obligations of the Guarantor under this Section 3.3 shall be reduced by the amount of such payment or performance.”
To this end, Ramjattan explained that the guarantor has opted to have the right to defend itself against Guyana, the beneficiary, even if the oil companies admit liability and urges the company to pay up.
According to him, “[It] seems under this (provision), the guarantor can drag it out in Court as if it was Hess doing so. So there is an oil spill, Hess admits fault and asks the guarantor to pay, the guarantor here says “Hold on…not so fast. You, government, did not do certain things and so contributed to spill.” Government then sues the guarantor and the guarantor can then, by virtue of this provision, say we have a defence, although Hess does not want to use it, but we the Guarantor will.”
As such, the Attorney cautioned that the matter can be dragged out for years in the Court for the country to access the oil spill guarantee.
Appeal Court Judge, Justice Rishi Persaud had ordered ExxonMobil Guyana to lodge a US$2B parent and/or affiliate company guarantee as a condition to a stay of execution granted on a lower court’s order. That order, originally issued by High Court Judge, Justice Sandil Kissoon called for an unlimited parent company guarantee to be provided to the EPA by June 10 or the Liza Phase One Project Permit would be suspended.
Consequently, the Guarantee and Indemnity Agreement was entered into on June 9, 2023.
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