Kemraj Parsram, Director of the Environmental Protection Agency (EPA), said that if a spill occurs offshore Guyana and the government needs to tap a US$2 billion guarantee from the Stabroek Block consortium, it can negotiate additional sums.
Parsram said that the US$2 billion estimate attached to the parent/affiliate guarantee from the ExxonMobil-led group is not a ceiling, but a floor.
The guarantee is often central to contentious media discourse about Guyana’s preparedness to deal with a spill. ExxonMobil has environmental liability insurance of US$600 million. The guarantee is the proverbial second line of defense.
“In the event something happens or a spill does occur and we realize a default and we have to go to this guarantee, and we find that it’s probably costing more, there’s a clause that says that the beneficiary, which is EPA, and the guarantor, can negotiate fulfilling the cost in excess of that,” Parsram said in a June 2 episode of the Guyana Energy Perspectives Podcast.
The official said the EPA determined an amount for the guarantee based on an estimate of the credible cost of a spill, taking its lead from several jurisdictions, including the United States, the United Kingdom and Australia.
Parsram explained that the regulator also requires the co-venturers to submit their financial statements annually, proving they have enough to cover their liabilities.
The combined assets of the Stabroek Block co-venturers were more than US$18 billion at the end of 2022. Major increases are expected in their 2023 statements, which are expected to be filed this month. The assets represent the third proverbial line of defense.
Parsram said too that a capping stack is on its way to Guyana, expected to arrive by the end of June. The equipment will be in-country to be deployed in the unlikely event a blowout preventer fails and there is a spill.
