High Court orders Environmental Protection Agency to ensure ExxonMobil has unlimited liability for pollution; Govt to appeal decision

Last Updated on Thursday, 4 May 2023, 14:03 by Writer

Guyana’s High Court on Wednesday ordered the Environmental Protection Agency (EPA) to compel ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), to take out an unlimited parent company guarantee and/or unlimited liability affiliate company guarantee to finance the cost of any chemical pollution.

The EPA has 30 days on or before June 10, 2023 to do so. If this is not done, the High Court said the Environmental Permit would stand suspended. But already, Attorney General Anil Nandlall said Justice Sandil Kissoon’s decision would be appealed and so the Court would be asked to stay its decision due to the grave economic impact the suspension of its operations would have on Guyana. “This ruling can have profound ramifications and grave economic and other impacts on the public interest and national development. As a result, the decision of the Learned Judge will be appealed and orders will be sought to stay its effect until the hearing and determination of the appeal,” Mr Nandlall said.

Mr Kissoon further ordered the EPA to ensure that EEPGL to take out environmental liability insurance “as is customary in international petroleum industry” and in keeping with the conditions of the Liza field Environmental Permit that was renewed on May 31, 2022. He said such insurance must be obtained from an insurance company standing and repute that equates to Grade ‘A’ plus in keeping with that Environmental Permit.

The Attorney General said the judge erred, and the High Court failed to consider that the EPA and EEPGL spent almost a year negotiating a
Parent Guarantee and Indemnity Agreement to the tune of US$2 billion in liability coverage in compliance with EEPGL’s financial assurance obligations under the Environmental Permit and the Environmental Protection Act. “These negotiations only concluded last week. These negotiations and their material details were placed before the Court for its consideration, but unfortunately to no avail,” Mr Nandlall said.

Justice Kissoon, in his decision, reasoned that EEPGL has an obligation to finance the impact and clean-up after pollution. “Equally, the concomitant financial assurance obligations imposed on ESSO by Condition 14:10 of the Permit ( Renewed) in the form of environmental liability insurance together with an unlimited parent company guarantee agreement are but the legitimate corollary flowing from its uncapped and unlimited liabilities arising from an event and pollution as encapsulated in the permit, to provide such financial
assurance, in the form of insurance and unlimited parent company guarantees to cover its liabilities,” the High Court decision states.

The Judge said the EPA refused to disclose any information as to the status of compliance by ESSO with its financial assurance obligations for pollution damage set out in the Permit. “The Agency sought refuge in silence, avoidance, concealment and secrecy notwithstanding the grave potential danger and consequences to the State and citizens if an event occurred at the Liza Phase 1 Petroleum Production facilities in the Stabroek Offshore Guyana in absence of such financial assurances mandated by the Environmental Permit ( Renewed) at Condition 14.