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Oil spill coverage
Editorial
(Kaieteur News) – Offshore oil projects pushed by ExxonMobil in Guyana keeps increasing. But total oil spill coverage remains paltry, is concerning. New wings are added to a building but the owners fool themselves that existing coverage is sufficient. It was not enough in the first place.
US$2B for 1M people equates to US$2000 per person (2,000,000,000/1,000.000 = $2000). It looks plenty. To a country with many impoverished citizens, US$2B held in reserve seems like generosity itself from ExxonMobil. It is a pittance, should there be the unfortunate occurrence of a catastrophic blowout at one of those offshore oil projects that Guyana’s oil partner races forward to get approved to keep its profit machine running unchecked. When projects are clustered in a tight arc, risks multiply. One leak that cannot be controlled could quickly lead to multiple failures that lead to a crisis. In such circumstances, which this country and its now oil-dependent people hopefully never experience, US$2B cap (and that US$600M insult for insurance) amounts to nothing. In aggregate, they almost have no bearing, because both the reserve lodged and that insurance policy are swallowed up before they could provide real relief.
A small, negligible spill could be covered by those two sums of money. But not one of any magnitude. BP’s Deepwater Horizon spill in the Gulf of Mexico in 2010 should stand as a stark warning for every Guyanese. It is the benchmark of how things can go wrong. One failure led to another, with lives lost, the environment severely damaged, and five of America’s states greatly harmed. Like all oil companies, including ExxonMobil, when the oil was being produced and profits soaring, BP gave assurances of robust risk controls in place. Those controls were robust, until they collapsed under pressure, were useless before the cyclonic force of the Deepwater Horizon explosion.
Guyanese must press their leaders. How much value would US$2B be in a big oil spill? How much would it stretch, how long would it last, when claims and costs mount, and with impact on ordinary citizens? Almost certainly, that reserve could be subject to a flurry of claims that shifts priorities from the losses of people to the sacred claims of property. Guyanese should not forget what happened went CLICO went down, who jumped to the front of the claims line, who got shoved out of their rightful place, and who ended up in the company of those who were bilked.
A real severe oil spill could inflict unprecedented damage on Guyana’s environment and Guyana’s economy with every citizen of this country taking a heavy blow. A major portion of any oil spill coverage would go to cleanup costs. In the event that neighbours are impacted, they are going to move with speed and determination to put in their claims before the courts.
The company had lodged US$2B with Guyana during the court proceedings that focused on an ‘unlimited parent company guarantee.’ ExxonMobil assures that it is still lodged with the government. Since the Court of Appeal overturned the lower court ruling, a relevant concern has to be if the company will continue to lodge that US$2B in Guyana’s hands. Given that ExxonMobil has waged a four-year battle with the Guyana Government over a mere US$214M in IHS Markit audit findings, the US$2B lodged may not remain that way for long. Since ExxonMobil has not managed this so-called partnership well, has been all about its own interests, the required level of trust is missing. We think that that this is a fair position, one that the company brought on itself, in spite of its reassuring rhetoric. First on its risk management practices, and also how much of a fair partner it is to Guyanese.
The final settlement figure worked out between the U.S. government and BP was US$20.8B. The company also incurred more than US$65B in cleanup and other costs. If the government is serious about this patrimony, the welfare of its citizens, and Guyana’s potentials, US$2B should not even be a starting point in any conversation that has to do with oil spill protection. ExxonMobil has sold the government that it would not walkaway should there be a costly spill. ExxonMobil must think Guyanese are fools.
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