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ExxonMobil and partners set stringent conditions for Guyana to access US$2B oil spill guarantee
…country will have to first write each guarantor detailing ‘legal basis’ to access sum
Kaieteur News – Before the Government of Guyana (GoG) touches a penny from the US$2B oil spill guarantee provided by ExxonMobil, Hess and CNOOC, the country will first be required to write each of the three guarantors informing of the company’s failure to meet its legal financial obligations.
President, ExxonMobil Guyana, Alistair Routledge
The Guarantee and Indemnity Agreement lodged by the Stabroek Block partners on June 9, 2023 makes it explicit, “In order for the Beneficiary (GoG) to exercise its rights under this Guarantee and Indemnity Agreement, the Beneficiary must provide to the Guarantor at the Guarantor’s address stated in Section 4.4, written notice, signed by an authorized representative of Beneficiary (the “Notice”), of EEPGL’s Default of the Environmental Obligation…”
The notice to the guarantor must detail the environmental obligation(s) that is (are) purported to have been defaulted on, including the legal basis giving rise to the environmental obligation (s) in question; how Exxon failed to satisfy the applicable Environmental Obligation(s) and the unpaid amount for which the company is liable for.
Additionally, the government under the agreement must also notify the guarantor that the oil companies have been advised of its intent to draw the guarantee.
Subsequently, “payment of any undisputed portion of the amount in default” shall then be made by the guarantor within 30 days after receiving the notice from government. This means that the guarantor must be satisfied that the claim made by the government has a legal basis for the oil spill compensation to be released.
Consequently, “Any dispute as to the Amount in Default, regardless of the amount in dispute, will be resolved by reference to an expedited arbitration…in the event any arbitral award holds that the EEPGL is liable for the disputed portion of the Amount in Default, Guarantor shall pay within fifteen (15) days of the award being received by the parties, such amount that was disputed plus interest at the Agreed Interest Rate specified in the Petroleum Agreement, not to exceed, in the aggregate with any other amount paid hereunder, the Maximum Amount.”
ExxonMobil, the operator of the Stabroek Block, holds 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 Stabroek Block.
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.
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.
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