ExxonMobil denies agreeing to US$2.5 billion insurance; former EPA Chief suggests company is lying

Last Updated on Monday, 28 February 2022, 21:44 by Denis Chabrol

ExxonMobil Guyana on Monday denied obtaining a US$2.5 billion insurance to cover the clean-up of the environment due to an oil spill or any other occurrence but former Executive Director of the Environmental Protection  Agency (EPA), Dr. Vincent Adams hours later insisted that such coverage had been obtained during his tenure.

“Contrary to claims in the media, ExxonMobil Guyana never agreed to insurance at a value of $US2.5Bn with a previous EPA administration.,” the company’s President here, Alistair Routledge said. But Dr. Adams challenged then ExxonMobil Guyana President, Rod Henson and the EPA  administration to prove that no insurance of close to US$2.5 billion had not been taken out.  Dr. Adams recalled successfully demanding insurance to that amount after a series of meetings that had involved the Bank of Guyana, the Insurance Association and ExxonMobil which had even submitted proposals on the subject.

The former EPA Chief said that insurance, which had been obtained in 2019, applied to certain types of occurrences, including an oil spill, at any of the oil fields. “It is not a thing I am guessing. I added it up. It may not be exactly 2.5 (billion dollars)…I added up the numbers because it had specific pieces in the letter that he brought to me,” he said. In an effort to guard against the limited liability status of Esso Exploration and Production Guyana Limited,  Dr. Adams recalled that he had insisted on a letter of assurance from the parent companies- Exxon, Hess and CNOOC- that they would be fully responsible should there be a spill.

ExxonMobil Guyana  categorically stated that “it has insurance coverage that meets international industry standards for all of its petroleum activities in Guyana”. Though the company  did not immediately say how much was that insurance coverage, it said there were other financial assurances that could be leveraged for a ready response to occurrences such as an oil spill. “The value of insurance will not limit the company’s ability to respond to an event, and response activities would certainly not be delayed by discussions with insurers,” the company said.

ExxonMobil sought to convince Guyanese that it had sufficient money and assets to “meet our responsibilities for an adverse event. “We are committed to paying all legitimate costs in the unlikely event of an oil spill,” Mr. Routledge said.

He said EEPGL, the operator of the Stabroek block, was established in 1998, and had, as of year-end 2020, almost $US5 billion in assets, “which is a primary form of financial assurance.”  “This is separate from the assets of the other Stabroek block co-venturers who also have substantial assets and share any liability for response activities,” he said.

In addition, the ExxonMobil Guyana President said his company working with the EPA and its co-venturers to put in place a combined $US2 billion of affiliate company guarantees. He said that amount would exceed the equivalent guarantees required by regulators in Canada, the United States and United Kingdom.

Mr. Routledge said ExxonMobil adheres to an internationally accepted, tiered response system used to determine the requirements of response personnel and equipment.  He said the system remains aligned with the principles of the International Convention on Oil Pollution Preparedness, Response and Cooperation (OPRC), the Caribbean Island Oil Pollution Preparedness Response and Cooperation (OPRC), and the National Oil Spill Response Plan of Guyana to provide an efficient framework to build preparedness and response capabilities matching the oil spill risks from all types of operations.

Dr. Adams, for his part, said based on recent utterances by Vice President Bharrat Jagdeo it appears as though the insurance has been scrapped.