Guyana’s Environmental Protection Agency (EPA) has clarified that ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. (EEPGL) will not recover the US$30 payment for CO2e emissions recently introduced in the modified Environmental Permit for the Liza Phase 1 Development.
The EPA clarification follows reports in the media that stated Guyana will have to bear 50% of the US$30 per tonne of CO2e payment since this will be treated as a recoverable cost under the Production Sharing Agreement (PSA).
The EPA confirmed however that ExxonMobil will not be recovering this payment and that this was indicated during discussions it had with the company.
“While the EPA in its role as an environmental regulator does not typically concern itself with the contractual arrangements between the Ministry of Natural Resources and EEPGL, during discussions with the company regarding the modifications, it was indicated that any such payments would not be recoverable against the Government of Guyana,” the Agency outlined in a statement on Thursday.
The environmental regulator pointed out that it views the modification, not as creating any additional adverse effects, but as a means of implementing more specific “flare management conditions” that are consistent with industry practice in order to regulate and/or deter periods of flaring.
On May 18, the EPA had announced that the Environmental Permit for the Liza Phase 1 project was recalled and modified to include more stringent regulatory requirements to address flaring in accordance with the EPA’s legislation.
The revised Environmental Permit features modified terms and conditions relating to the emission reporting requirements, technical considerations for flaring, and timelines for flaring events. Additionally, it also contained an obligation on ExxonMobil Guyana to pay for the emission of carbon dioxide equivalent as a result of flaring in excess of timelines for commissioning and start-up. That payment shall be made to the EPA and is calculated at the rate of US$30 per tonne of CO2e.
Further on, the EPA reminded that some amount of flaring is expected at the Liza Phase 1 Development for maintenance events, process upsets, and equipment failures given the complexities of oil and gas production in the offshore environment.
Nevertheless, the EPA said it has pursued modification to ensure that there are environmental safeguards and deterrent mechanisms to address any prolonged periods of flaring that may pose risks to the environment.