Last Updated on Friday, 5 May 2023, 18:26 by Denis Chabrol
ExxonMobil Guyana on Friday said it was mulling the way forward after a High Court ordered the Environmental Protection Agency (EPA) to enforce an “unlimited guarantee” of funds to deal with pollution from its offshore Liza 1 field.
“We are reviewing the court’s decision and evaluating potential next steps,” the company said in a statement.
Attorney General Anil Nandlall has said government would ask the High Court to stay its orders that effectively give EPA until June 10, 2023 to have unlimited parent company guarantee and/or unlimited liability affiliate company guarantee to finance the cost of any chemical pollution or the licence would be suspended.
ExxonMobil criticised the court’s decision, saying that all of the co-venturers- the ExxonMobil subsidiary Esso Exploration and Production Guyana Limited, Hess and the China National Overseas Oil Company- have access to sufficient cash to deal with any environmental fall-out from the Liza 1 well. “It is disappointing that the court failed to appreciate and acknowledge the financial capabilities of ExxonMobil Guyana and its co-venturers to meet their obligations, the insurance we already have in place, and the progress towards agreeing to a guarantee that exceeds industry benchmarks,” ExxonMobil Guyana said.
ExxonMobil Guyana and its Stabroek block co-venturers have adequate and appropriate insurance and proposed guarantees in an amount that exceeds industry precedents and an estimate of potential liability, the company added.
But Mr Nandlall hoped to get the stay of the orders on the basis that Justice Sandil Kissoon’s ruling “can have profound ramifications and grave economic and other impacts on the public interest and national development.”
In welcoming the High Court’s decision, Alliance For Change (AFC) Executive Member Dr Vincent Adams drew a parallel between insurance for oil production operations and insurance for people and their properties. “This is the same as your health, car, or home insurance, where the insurance covers a certain amount and you have to cover all of the remainder,” he said. The AFC said that ruling was undoubtedly a major milestone and victory not only bringing a deep sense of relief to the people of Guyana, but also to our Caribbean neighbours, whose livelihoods were also threatened should an oil-related disaster strike.
Vice President Bharrat Jagdeo on Thursday said EEPGL has obtained a US$600 million insurance policy whose certificates had been deposited at the EPA. He said the insurance premium was being paid from cost oil. In addition to the insurance, Mr Jagdeo said EEPGL’s total assets amounting to between US$6 billion to US$8 billion which the EPA could access if the US$60 million is insufficient as well as adequate parent company guarantee.
Mr Jagdeo flayed the High Court for stating that there needs to be an unlimited rather than adequate guarantee as no insurance company could provide that. “Unlimited doesn’t define a number because the number determines the premium so there is nothing called like that in the world of insurance,” he said. “I am not going to run down the judge but I think a lot of things were not understood clearly and sometimes it gets a bit complex,” he added. Mr Jagdeo said the court was treading on murky ground and should not intervene by giving a regulatory agency a deadline.
Justice Kissoon found that the EPA had refused to furnish the court with required information.