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Local insurers now cleared to cover Stabroek Block
—EPA says it means ‘everything will not go out of Guyana’
(Kaieteur News) – Executive Director of the Environmental Protection Agency (EPA), Khemraj Parsram, on Sunday confirmed that local insurers are now authorised to cover Stabroek Block operations, meaning ExxonMobil and its partners must secure oil spill insurance through Guyanese companies.
Under the revised oil and gas permits, only insurance companies holding Local Content Certificates can participate, opening the door for local firms to play a direct role in insuring the country’s largest petroleum operations.
The Stabroek Block that local insurers can now insure.
Appearing on Sunday’s Starting Point podcast, Parsram credited the Bank of Guyana (BoG) for driving the regulatory changes that made this possible. “In the early days, we didn’t have legislation allowing local insurers to provide this level of financial assurance. So initially, it had to go international,” he explained. “But this change builds local content. It gives local insurers the ability to join and benefit from this.” He added that because the resources belong to the Guyanese people, it is only fair that local companies gain meaningful participation. However, Parsram stressed that while local involvement is important, the required level of financial assurance cannot be diluted. Whether the coverage comes from local insurers, international ones, or a combination of both, the full liability threshold must always be met. “Local content is important, and it allows local players to benefit. It means everything doesn’t go out of Guyana,” he said.
The EPA director said that, the important thing is that the “amount of financial assurance is not watered down by having local players versus international players.” It does not matter how it is done, even if it is a combination of international and local insurers the level of liability must be met in any case. “…But the good thing is that local content is important, and it’s allowing the players, the local players, to benefit from that as well. So, everything doesn’t go out of Guyana, so to speak,” Parsram said.
Executive Director of the Environmental Protection Agency (EPA) Khemraj Parsram.
Going on to speak on financial assurances on a wider scale he said that there is also insurance in the form of the parent company guarantee, and more importantly the Oil Pollution Prevention Responsibility Act, was recently passed by the government. This Act he explained outlines all the regulatory measures that must be taken by the developer, to ensure that prevention of spills, and that there is preparedness to ensure response capability as well as responsibility. “…responsibility aspect is a liability, your financial assurance. So, if there is whatever cost it is, it is on the developer. In this case, the Government of Guyana and the EPA will assist, because it’s our responsibility, but the cost for cleanup, response and all these other things is the responsibility of the developer in this case, or the operator,” he noted.
The permit requires after being issued, the oil company has to operationalize its oil spill response plan at least twice, within three years of receiving the permit. This in turn stresses environmental accountability and strengthening the readiness of the operators.
The EPA head highlighted that anyone can be given a plan but the manner in which they will ensure that the plan and the resources required for it are effective, adequate and can be leveraged in the event of something happening is what matters. “So that is why we’re mandating as well, because it’s not just ExxonMobil in this case, or the operator that we require to respond, they may need, you know, other agencies, other partners, to come into play.”
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