Guyana’s Vice President, Dr. Bharrat Jagdeo revealed on Thursday evening that the government is working with ExxonMobil, the parent company of Esso Exploration and Production Guyana Limited (EEPGL) to secure an insurance guarantee for the entire Stabroek Block.
The former Head of State who oversees the oil sector made this disclosure in response to recent appeals and statements from the political opposition to ensure the Yellowtail Environmental Permit includes a provision for ‘full coverage’ insurance. Dr. Jagdeo alluded that he finds such requests, particularly from AFC Members David Patterson and former EPA head, Dr. Vincent Adams, to be duplicitous since none of the permits (for the Liza Phase One and Two Projects) issued during the APNU+AFC’s time in office ever included such arrangements.
Be that as it may, Dr. Jagdeo said, “…let me assure Patterson that the provisions surrounding insurance (for the Yellowtail Project) will be stronger than any they have issued. And separately, not part of the permitting process, we are working to secure a parent guarantee that would cover the entire Stabroek Block… But that’s a separate issue.”
He continued, “So Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams had said that he had something, he was thinking about something (of a similar nature) when he was there, but he didn’t do it, but we are doing it.” The Vice President, therefore, reasoned that for the opposition members to now go before the public and issue such calls for full coverage insurance, it can only be deemed insincere and a mere convenience.
It should be noted however that the Liza Phase Two Permit which was issued during the period Dr. Adams headed the EPA, did in fact demand that EEPGL provide from the parent company or affiliate companies of the permit holder, one or more legally binding agreements to the EPA undertaking to provide adequate financial resources for permit holder and its co-venturers to pay or satisfy their respective environmental obligations regarding the Stabroek Block if EEPGL or its co-ventuers fail to do so. This is specifically outlined at section 12.5 of the permit. A key point to note is that the provision does not state specifically when EEPGL has to provide such a guarantee from its parent company or affiliate companies. It simply says that it has to do so within a reasonable time frame.
OilNOW observed as well that the said provision was copied and made part of the Payara Environmental Permit issued by the Ali administration in 2020. It was not however made part of the Liza Phase One permit that was updated by the EPA in 2021.
Earlier this month, ExxonMobil Guyana President, Alistair Routledge had said that EEPGL is working with the EPA and its co-venturers Hess and CNOOC, to put in place a combined US$2B package of affiliate company guarantees. Routledge was keen to note that this value exceeds equivalent guarantees required by regulators in Canada, the United States, and the United Kingdom.
He had also assured that EEPGL which signed the Stabroek Block Production Sharing Agreement (PSA) as the designated Operator for the oil-rich concession, has insurance coverage that meets international industry standards for all of its petroleum activities in Guyana.
The Exxon official had said too that in Guyana, his company 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.
