Guyana’s Attorney General, Mohabir Anil Nandlall has applied to be a party to the court case concerning the provision of financial assurance for the ExxonMobil-operated Stabroek Block in the case of a spill. In this bid, Nandlall is warning that if the Liza 1 environmental permit at the centre of the case is cancelled, disastrous economic consequences will follow for the State and the people of Guyana.
High Court Judge Sandil Kissoon had ordered, among other things, that an ‘unlimited’ parent guarantee be provided by ExxonMobil Guyana, based on his examination of the permit. If this is not provided in a specified time, the environmental permit would be cancelled, bringing a halt to the project currently producing 150,000 barrels of oil per day (bpd).
The AG’s Affidavit states, “If production ceases by the Decision of the Hearing Judge, the Government of Guyana will be faced with huge revenue shortfalls, which would have disastrous economic consequences for the economy, the country’s developmental agenda, and private sector investments cumulating in immeasurable damage to the public good and the national interest.”
The AG’s main contention with the High Court decision is that the permit does not require the guarantee to be unlimited. Government has also argued that there is no precedent for this in the global oil industry.
The Environmental Protection Agency (EPA) moved to Guyana’s Court of Appeal asking for Kissoon’s judgment to be overturned in the case which was brought before the High Court by activists, Frederick Collins and Godfrey Whyte. Nandlall would be the government’s representative, joining the case alongside these activists, the EPA, and ExxonMobil’s Guyana affiliate, Esso Exploration and Production Guyana Limited (EEPGL).
Nandlall also asked the Court to stay the effect of Justice Kissoon’s ruling until the conclusion of the Appeal case. Justice of Appeal Rishi Persaud had heard an application for a stay before, from the EPA, and opted not to grant one, as he intends to conclude the case before the June deadline. The case comes up for hearing on May 31.
The Stabroek Block is the most pivotal asset driving Guyana’s economic boom today. Nandlall believes this matter will not only affect Liza but approvals for other projects. The requirement for financial assurance is in multiple ExxonMobil permits. So, a preservation of the High Court decision would have a domino effect sooner or later.
Liza 1 is producing alongside Liza 2, which is capable of producing 230,000 barrels per day (bpd). Exxon and its Stabroek Block partners have also received approval for the Payara, Yellowtail and Uaru projects, and is seeking approval for a sixth project. Together, these would see production offshore Guyana exceeding 1.2 million bpd by 2027.
Exxon believes the protections it has negotiated with the EPA and the Guyana government are adequate. These include US$600 million in environmental liability insurance, over US$18 billion of combined assets from the subsidiaries of the Stabroek Block co-venturers, and a US$2 billion guarantee. These protections provide more than US$20 billion of cover. As the assets of the co-venturers grow, this cover is expected to increase annually.
