The PPPC Govt. can do more to hold Exxon to a higher insurance level

Jun 10, 2023 Letters

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Dear Editor,

Kaieteur News – The current administration should be applauded for its improvements to the EPA permit. However, there continues to be areas where further improvement is required in the execution of the permit and the resulting protection of our homeland.

The Liza Phase One Renewed Permit sections 10.1, 10.6, 10.12b), 14.4 and 14.5 speak clearly to the requirements of the operator and highlights the flexibility that the EPA has in requiring unlimited liability insurance coverage. In section 10, Oil Spills and Emergency Management, section 10.1 states:

“The Permit Holder, in the event of a discharge or spill of any contaminant into the water or on land must comply with the polluter pays principle and is therefore responsible for eliminating or controlling the discharge/spill, cleaning up to the extent practicable, and remediating any resulting damage, monitoring of the impact and taking appropriate measures to prevent, reduce and or mitigate impacts, consistent with the National Oil Spill Contingency Plan, the OSRP, and the Environmental Protection Act”.

Section 10.6 states:

“The Permit Holder shall bear all costs of the restoration, rehabilitation and compensation required as a result of damage incurred due to an oil spill or other emergency resulting from the execution of the Project. The costs herein referred to shall be independently assessed and evaluated by a third party determined by the Agency. Nothing contained herein shall prejudice the right of public and private actors to pursue criminal and/or civil action against the Permit Holder”.

Section 10.12 b) states:

“In satisfying Condition 10.10”, which speaks of the Oil Spill Response Plan (OSRP), “the Permit Holder shall, at a minimum:

1. b) cover a range of scenarios including, but not limited to, responses to large continuous spills, spills of a short duration and limited volume, and worst-case discharge scenarios;”

Specifically, section 14.4 allows the EPA to require unlimited liability insurance coverage if so desired. Section 14, Financial Assurance and Liability for Pollution Damage, 14.4 states:

“Notwithstanding the above, the Agency may require such further forms of financial assurance, and coverage as it considers appropriate”.

Section 14.5 states:

“The Permit Holder shall have valid and effective environmental liability insurance, of such type and in such amount as is customary in the international petroleum industry, for petroleum operations in relation to this Permit…..or equivalent as deemed appropriate by the Agency, and shall include, but may not be limited to insurance in respect of:

1. loss and damage of all assets used in the Project;
2. environmental damage caused in the course of the Project for which EEPGL will be, jointly and severally, held responsible;

iii. loss or damage to property or bodily injury suffered by any third party in the course of the Project for which EEPGL is liable to;

1. EEPGL’s liability to its employees engaged in the Project; and
2. any other requirement(s) made by the Agency”.

Some of the questions and items which the current administration should be considering are:

1. Whether the planning for the worst-case scenario requirement in the permit (10.12 b) has determined a range on the cleanup costs, and if so what will be the required coverage for such a scenario?
2. Why is there a hesitation by Exxon to financially secure their full financial assurance coverage commitment with an insurance policy that matches? The cost of coverage has not been presented, nor has the scenario planning been published for public comment. The financial assurance commitment previously provided must be legally binding as an added incentive for Exxon to financially mitigate their risk exposure with the use of an adequate insurance policy.
3. Based on previous US congressional hearings the amount of recommended coverage is in the double digit ($10 Billion) range and not at the low single digit level that has been proposed ($2 Billion)
4. How will the proposed $2 Billion in coverage cover the asset value for the exposed assets in the sector, which were reported as currently being valued at approximately $6 Billion? Clearly the figure proposed by the current administration is inadequate.

Based on the renewed permit, the Environmental Protection Agency of our Nation has the needed flexibility to ensure that the country and the exposed Caribbean Region are adequately protected and covered by an insurance instrument in the unfortunate event of a major oil spill. The reluctance to do so and the current administration’s inability to pivot towards stronger protection for the environment within the region and our national financial interests do raise serious concerns. The position taken by Justice Kissoon was prudent, reasonable and responsible in light of the aggressive oil extraction process underway off the coast of Guyana. CRG supports the call for increased liability insurance and calls on the current administration to adjust its position towards the sector by strengthening the EPA with those who place the safety of our environment first and foremost in their decision making; and by supporting the opportunity provided by Justice Kissoon’s judgement to increase the liability coverage of the sector. We must ensure that we avoid exposing our Nation to bankruptcy!

With concern,
Mr. Jamil Changlee
Chairman
The Cooperative Republicans of Guyana 

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