Exxon says US$2B guarantee can compensate Guyana, Trinidad and Venezuela in event of oil spill

Jul 24, 2024 News

Kaieteur News – ExxonMobil Guyana’s Projects Environmental and Regulatory Manager, Maria Skocik has assured that should there be an oil spill Guyana, Trinidad and Venezuela can be adequately compensated from the US$2B oil spill guarantee.

Skocik was asked to speak on the economic impacts a potential oil spill will have on Guyana and the Caribbean region, and whether the insurance in place will fully cover Guyana, as well as compensate the other countries affected.

“First and foremost, we are committed to safe operations, both personnel safety and environment, so as Becky was mentioning, we are doing everything possible to ensure that no incidents happen. In the off chance they do occur, we have technical and financial capacity to be able to respond to those incidents,” the Exxon official said.

She explained that there are measures in place like insurances and there will be mechanisms activated to facilitate cleanup.

“So there are things like insurances in place, there will be mechanisms for cleanup and for grievances and for business to submit claims. But again that being said in the way we design projects and the way we operate them is we do everything possible to prevent incidents from happening,” she stated.

To get clarity, this publication asked, “So you are saying if an incident occurs, Guyana will get full coverage and also the affected countries like Trinidad or Venezuela?”

In response Skocik said, “Yes, it absolutely does. So again, in an off chance an incident does happen, there will be a process for complete mitigation and mitigation of the area so there will be efforts to clean everything up and also support financially for parties that are impacted.”

The oil company 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.

However, the assurances provided 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.”

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.

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.

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.

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Exxon says US$2B guarantee can compensate Guyana, Trinidad and Venezuela in event of oil spill

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