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Govt. awaiting full report on whether ramping up of oil production breaches insurance – Jagdeo
Vice President, Bharrat Jagdeo
Kaieteur News – The Government of Guyana (GoG) is awaiting a full report from its technical staff on whether the ramped-up production of oil in the Stabroek Block by ExxonMobil Guyana Limited (EMGL) constitutes a breach of the insurance and US$2B oil spill guarantee lodged by the Co-Venturers.
Chief Policymaker for the petroleum sector, Vice President Bharrat Jagdeo during his weekly press conference on Thursday at Freedom House said he raised the issue with the Environmental Protection Agency (EPA) and the staff of the Ministry of Natural Resources.
He was responding to a question from Kaieteur News when he explained, “I have asked the EPA about this question…this is not a question for the politicians. If your technical staff who are responsible for ensuring safety in the country and these are the people who are trained to do so in both the ministry and the EPA say that they have reviewed the submissions from ExxonMobil and that they find that the increase in production above the announced capacity of these vessels is safe then the politicians have to accept this.”
Jagdeo however noted that while he does not “second guess” the decisions of the technical staff, he has asked some additional questions on the possible ramifications of the decision to allow the company to produce above the safe operating limits outlined in the Environmental Impact Assessments (EIAs).
To this end, he said, “They have to give me a full report on all of these issues. So I’ve done it through the Minister and directly to the EPA so these are additional questions that I have asked.”
The Vice President’ s comments come on the heels of an article by Kaieteur News on Tuesday where it was reported that the ramping up of oil production in the Stabroek Block by American oil major, ExxonMobil is not covered by the US$2 billion oil spill guarantee provided by the Co-Venturers.
The affiliate company guarantee, seen by this newspaper, makes it explicit “…the Operator is permitted to carry out the activities authorised by the Environmental Permits in accordance with their respective terms and conditions.”
The Environmental Permits granted by the EPA were approved based on EIAs conducted by Exxon. These documents outline the company’s plans to produce oil at a specific capacity and assess the damage of an oil spill accordingly. The Floating Production Storage and Offloading (FPSO) vessel is also designed to produce crude oil in accordance with the EIAs.
Exxon currently has three projects operational in the Stabroek Block that are producing above the safe operating limits outlined in the EIAs.
Previously, Attorney-at-Law, Christopher Ram warned that the insurance company can refuse to compensate the country for any damages as it knowingly allowed the operator to breach safe operating limits.
He explained, “In petroleum production, there is a safety margin below the rated productive capacity of a well. Not only is there an increased risk that something can go wrong, but that when it does, the insurance companies will refuse to pay because you have breached the safety limit.” Moreover, Ram cautioned that the oil companies too can refuse to accept responsibility since the Government was not only aware of the breached safe operating limits but condoned and supported it.
ExxonMobil is the operator of the Stabroek Block with a 45% interest, while Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.
Each Co-Venturer has contributed to the US$2B guarantee, relative to its participating interest in the block.
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 Environmental Protection Agency (EPA) by June 10 or the Liza Phase One Project Permit would be suspended.
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