ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL), has renewed its US$600 million per occurrence insurance policy for the Stabroek Block for the period 2023 – 2024. This was confirmed recently by Counsel for EEPGL, Edward Luckhoo SC.
Luckhoo is part of the team representing EEPGL in an appeal filed against a High Court judgment. The High Court ordered the provision of an unlimited parent and/or affiliate company guarantee for oil spills stemming from the Liza Phase 1 Project. That order has since been stayed until the conclusion of the appeal.
The renewal of the insurance policy was outlined in an affidavit submitted to the High Court by Douglas B. Neagli, General Counsel and Corporate Secretary for EEPGL. Negali explained that the current form of the policy in place for Guyana’s Stabroek Block is known as a Market Reform Contract. He said this is an industry standard that is adopted and amended as necessary for the purposes at hand.
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Negali explained that the policy is backed by three international insurers, each of which subscribed to a proportion of the risk, based on their risk appetite. The names of the insurers are Ancon Insurance Company; Jamestown Insurance Company Limited; and ICM Assurance Limited.
He said, “Each insurer has a strong credit rating as follows: Ancon Insurance Company Inc: AA-/ Stable by S&P Global; ICM Assurance Ltd: A by AM Best; and Jamestown Insurance Company Limited Rating: A- by AM Best.”
Negali was keen to point out that Condition 14.5 of the Liza Phase 1 Permit states that the insurance is to be procured from an insurance company assigned “Grade A+ by the Better Business Bureau (BBB) or equivalent as deemed appropriate by the agency.”
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“Esso’s research indicates that the BBB does not rate any insurance companies in Guyana or internationally nor does the BBB provide credit ratings,” Negali pointed out.
Based on his experience with such ratings, he said the Environmental Protection Agency would be justified in applying its discretion in this area to accept the ratings of S&P and AM Best as an acceptable alternative to a BBB rating which does not assess the creditworthiness of insurance companies.
The Corporate Secretary said the renewed policy is effective February 1, 2023 to January 31, 2024.
