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US$2B oil spill guarantee exposes Exxon’s ‘promise’ to compensate for all damages
…as agreement supersedes all oral statements, previous writings
Kaieteur News – ExxonMobil Guyana Limited (EMGL) often touts its capacity to take care of an oil spill in the event such a disaster occurs in the 26,800 square kilometers Stabroek Block. The company, whenever faced with questions about the cost of an oil spill, previously assured that it will not walk away from the country but will handle associated cleanup and compensation.
The assurances provided however have been cast aside with the US$2B oil spill Guarantee and Indemnity Agreement superseding all oral statements and prior writings. In fact, the agreement, entered into by the Executive Director of the Environmental Protection Agency (EPA), Kemraj Parsram, explicitly outlines US$2B as the maximum amount to be provided by the Stabroek Block partners collectively.
According to the document, “This Guarantee and Indemnity Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter and supersedes all oral statements and prior writings with respect thereto; provided that for certainty it is acknowledged by the Beneficiary and the Guarantor that this Guarantee and Indemnity Agreement is not intended to and does not amend any term or provision of the Petroleum Agreement.”
President of EMGL, Alistair Routledge during a May 19, 2023 press conference explained that Guyana was safe from liabilities associated with a spill. The company had called the media shortly after the High Court ordered an unlimited parent company guarantee to protect this country from the financial burdens of a spill. At that time, he pointed to the company’s insurance policy, a US$600M coverage per event, and the US$2B guarantee which was being discussed.
It was reported that the official also went on to note that the company would then tap its Guyana assets which were valued at around US$19B.
“We have an absolute obligation as the operator and the investor in the Stabroek Block to prevent incidents from happening, do everything we can and to mitigate those and if we have to, then we bear the cost of cleanup and any liabilities that go with that…but our absolute commitment is to first prevent these from happening,” Routledge explained.
At a number of its scoping meetings for new oil projects, the company also faced questions from the public on the safety of its operations and the economic impact of such an event.
Exxon’s response has always been that the company will not walk away from Guyana but would handle the associated damage caused, as well as compensate for losses.
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