Monday, September 26, 2022

Yellowtail Permit requires high credit rating from Exxon’s insurers to cover potential pollution damage – Bharrat

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Even as Guyana forges ahead with multiple discoveries and approvals for offshore oil and gas production operations, authorities remain keen on ensuring the South American country has a robust system in place to minimise the impact these activities are having on the environment. Minister of Natural Resources, Vickram Bharrat was keen to underscore the government’s commitment in this regard during his contribution in the National Assembly last Thursday.

Mr. Bharrat said the government has not only ensured that there are rigid insurance requirements for oil spills in place but have also set high standards for the insurers used by ExxonMobil affiliate, Esso Exploration and Production Guyana Limited (EEPGL).

“The Yellowtail Environmental Permit makes an important leap that further refines the insurance requirement and addresses the credit rating of the issuer,” he said. “It requires issuers of the insurance to be grade A+ by the Better Business Bureau (BBB) or equivalent as deemed appropriate by the agency. The rating is a measure of solvency, financial strength, and the ability of the insurers to pay policy claims.”

He pointed out that defining the appropriate credit rating is axiomatic to effective financial coverage for potential pollution damage.

“The improvements made by the Yellowtail Environmental Permit are also embodied in the renewed Liza 1 Permit,” Mr. Bharrat added.

Liza Permit to follow Yellowtail Standard – EPA Head | OilNOW

He was keen to highlight other improvements to his parliamentary colleagues which include Exxon covering the cost of removal of wreckage and clean-up operations required as a result of an accident occurring in the course of permitted activities.

According to the Yellowtail Permit, the Permit Holder has to submit to the Environmental Protection Agency as soon as reasonably practicable upon its request, a series of documents and evidence to ensure the State is well protected. These include Environmental Liability Insurance policies in both a printed and electronic copy; a summary of the Environmental Liability Insurance policies detailing the insurer, the type of insurance, the amount of coverage provided by each policy, key terms of the insurance policies, what types of environmental damage the policies cover, what types of environmental damage the policies do not cover, and the duration of each policy; evidence that the insurer is authorised to provide the insurance in Guyana; evidence of authorisation of the institution or parent (insurers) to provide insurance; evidence of the insurer’s financial strength; and evidence of the insurer’s BBB grades.

Yellowtail Permit armed with most superior provisions for insurance, oil spill prevention/management – EPA officials | OilNOW

The Permit Holder must also, as soon as is reasonably practicable, provide from the parent company or affiliate companies of permit holder and its co-venturers one or more legally binding agreements to the agency, in which the parent company or affiliate companies of the permit holder and its co-venturers undertake to provide adequate financial resources to pay or satisfy their respective environmental obligations regarding the Stabroek Block.

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