ExxonMobil, EPA “close” to agreeing to $2 billion environmental assurance

Last Updated on Wednesday, 9 March 2022, 20:47 by Denis Chabrol

ExxonMobil’s controlled Esso Exploration and Production Guyana Limited (EEPGL) on Wednesday said it was very close to reaching agreement with the Environmental Protection Agency (EPA) on a US$2 billion assurance to help fund a clean-up should there be an oil spill.

EEPGL’s Vice President and Business Services  Manager, Phillip Rietema said his consortium and the EPA were quite close to signing off an affiliate company environmental guarantee  regarded in industry circles as another form of assurance.

“We have insurance that is for our benefit. If we do not address all of the environmental obligations, then we have affiliate company guarantees, that’s $2 Billion, that would be for the benefit of Guyana,” he told the media on Wednesday.  The guarantees are being contributed to by EEGPL, Hess Corporation and the China National Offshore Oil Corporation (CNOOC).  “So if EEPGL, Hess, CNOOC, if we all default, very very unlikely… then we’re also providing guarantees from other companies within our group, that would be for the benefit of Guyana. It’s very close (to being concluded). Very, very soon. Final details are being worked out,” he said.

ExxonMobil has consistently declined to disclose how much insurance it has taken out for its Guyana operations, but has pointed out that EEPGL has about US$5 billion in assets that could go towards a major oil spill response. The company also continues to boast of rapid response mechanisms to clean up crude oil and prevent a slick from landing on the coast.  “EEPGL and the other co-venturers are responsible if a spill happens, and we’ll act as quickly as possible to address any environmental incident. In our view, the fact that we’re a world-class operator, makes a major spill very unlikely. But if one were to occur, we have the financial and technical resources to address it,” he said.

The EEPGL Vice President explained that the insurance would provide the joint venturers the opportunity to recover monies spent on an environmental issue. “We’ve procured industry standard insurance, for the benefit of ExxonMobil Guyana and the co-venturers. So if we have costs associated with an environmental incident, after we pay for those expenses, we could then go to our insurance companies and file a claim against our policy, and they would reimburse us for these expenses,” he said.

EEGPL has discovered a number of commercially viable wells and is producing oil from Liza, with plans to do so from Payara and Yellowtail.

The Stabroek Block is estimated to contain more than 10 billion barrels of oil equivalent. ExxonMobil plans to drill  10 exploration wells this year and another 10 next year. The company forecasts Guyana producing almost 1 million barrels per day by 2027.

The Wall Street Journal reported this week that Venezuela, which in the 1990s had produced 3.2 million barrels of crude per day, has a daily output of 800,000 barrels.