Saturday, July 2, 2022

Guyana working to secure up to US$2 billion insurance from Exxon for Yellowtail project

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Though there exists an “implicit” understanding that ExxonMobil Corporation would cover the shortfall of expenditure associated with any environmental damage its affiliate Esso Exploration and Production Guyana Limited (EEPGL) cannot handle for the respective Stabroek Block operations, the Guyana government is still pursuing a formal guarantee. On Monday, Vice President, Dr. Bharrat Jagdeo said the government is looking to get as much as US$2B from the parent company to cover any damage in the South American country.

During a press conference, the Vice President said, “As you know, we are constantly seeking to improve the permits and in the one we are looking at in the Yellowtail Project, we are looking for a generic position where the parent company, ExxonMobil, will now guarantee; well we are looking at maybe up to US$2B for any damage caused here… because from the beginning there was no parent guarantee, it was implicit but…that is crucial for us as we move forward.”

In noting the rationale for insurance being secured from the parent company, Dr. Jagdeo said, “…this has been a long-standing issue in the private domain and one of the criticisms was that should you have a spill or anything of that nature that there would not be a specific guarantee from the parent company to the local company.  So, this is trying to nibble away at all of the issues that we have had problems with.”

Exxon’s mitigation measures will reduce emissions at giant Yellowtail development – EIA

Even as the government continues those negotiations with ExxonMobil, the company has said in the Yellowtail Environmental Impact Assessment (EIA) that joint insurance coverage will be obtained in the name of EEPGL and the other Stabroek block co-venturers for the appropriate lines of coverage, depending on the project and scope of work.

Specifically for the Yellowtail Project, it was noted that the co-venturers have insurance coverage including Third Party Liability and the cost of regaining control of a well.

OilNOW recently reported that the Yellowtail project will cost GY$1.8 trillion (US$9 billion). Exxon was keen to note that the project costs are anticipated to increase given the higher numbers of development wells and associated drilling costs when compared to its Payara project which carries a similar price tag.

Yellowtail will develop largest resource base to date, Pinktail and Whiptail could be 6th project

The company said the project will generate benefits for the citizens of Guyana in several ways, including through revenue sharing with the government, as detailed in the Petroleum Agreement. Exxon said the type and extent of benefits associated with revenue sharing will depend on how decision-makers in government decide to prioritize and allocate funding for future programmes.

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