Vice President Dr. Bharrat Jagdeo explained on May 11 that the cover in place for Guyana in case of a spill amounts to some US$16.6 billion.
This follows a statement from the Environmental Protection Agency (EPA) which said negotiations with the permit holder, ExxonMobil, concluded on April 27, 2023, resulting in an agreed-upon amount guaranteed, along with terms and conditions for renegotiation in the event of increased risks or unfulfilled obligations exceeding the guaranteed amount.
The guarantee, valued at US$2 billion, would be there in case of a spill, if Exxon’s insurance policy and its assets are not enough to respond to the impacts and fallout associated with an oil spill.
The environmental liability insurance is US$600 million. Once this runs out, Exxon would have to rely on its assets to cover additional expenses. Jagdeo said during a previous press conference that the assets of Exxon’s Guyana affiliate would be somewhere between US$6 billion and US$8 billion. He however noted during the more recent forum that the company would have access to US$14 billion. The difference is assumed to be the assets of the subsidiaries of Exxon’s Stabroek Block co-venturers, Hess and CNOOC.
“First of all, the first line is the $600 million. Then another line, which would be about the $14 billion of assets that a company likely would have, $14 billion. So, that gives you $14.6 billion. And then the $2 billion… company guarantee. So, about $16.6 billion.” Jagdeo outlined.
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That makes three lines of defense protecting the Guyana government from liability in the unlikely event of a catastrophic spill.
The Vice President stressed the importance of determining a value of cover based on an estimate of risk. This calls back to the most critical disagreement the government and the EPA have registered with a recent ruling of the Supreme Court that the guarantee should be ‘unlimited’. This is a major contention in an appeal of the ruling, which has been filed with Guyana’s Court of Appeal. The hearing convenes on May 15.
