For each oil production project led by ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL) offshore Guyana, there is a ‘per occurrence’ insurance coverage of US$600M related to oil spills. This is according to Head of the Environmental Protection Agency (EPA), Mr. Kemraj Parsram.
“I am awaiting final confirmation on the value for Yellowtail (but) I don’t expect it to be less than that of the existing (arrangements),” expressed the environmental regulator.
In addition to the foregoing coverage, he said Exxon’s affiliate also has self-insurance in place. For EEPGL alone, this stands at around US$5B to US$7B. He was keen to note that the government is still in talks with ExxonMobil for a parent guarantee which is being proposed at US$2B.
Parsram said, “We are asking for an estimate of the reasonable, credible cost for cleanup, etc. for a worst-case scenario oil spill to assess if US$2B is adequate or not and of course, we are also working on a clause that allows for renegotiating the US$2B or any other amount we agree on based on increasing risks. But the protecting clause would be indemnification of the Government of Guyana…”
OilNOW previously reported that ExxonMobil had assured Guyanese that it has the technical and financial resources to address a spill, though it is very unlikely to occur. The company said it adheres to an internationally accepted, tiered response system used to determine the requirements of response personnel and equipment. He said this 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.
“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. We have the financial capacity to meet our responsibilities for an adverse event and we are committed to paying all legitimate costs in the unlikely event of an oil spill,” President of ExxonMobil Guyana, Alistair Routledge said.