Opposition Member of Parliament (MP) David Patterson has filed a motion for the National Assembly to call on the PPP/C government reverse its decision to end negotiations with ExxonMobil affiliate Esso Exploration and Production Guyana Ltd (EEPGL) to have its parent company provide unlimited liability insurance for possible oil spills.
The motion states that not only did the government end those negotiations but also failed to finalise a guarantee agreement mandating EEPGL’s parent company, ExxonMobil, to provide unlimited liability oil spill coverage from the Liza-2 oil field development.
“Be it Resolved that the Government recants its decision to cancel the process already established in 2017 for obtaining unlimited liability coverage by EEPGL’s parent companies – a process that was agreed upon by Exxon and made a condition of the Liza 2 Permit, and was close to being finalized when the PPPC took office in 2020,” the motion states.
Additionally, it notes that EEPGL agreed to urgent purchase of the maximum available private insurance prior to signing the Permit in 2019.
The agreement was made during the tenure of Dr Vincent Adams as the Executive Director of the Environmental Protection Agency (EPA). According to Adams, the companies were allowed time to review the unsigned guarantee agreement and decide on how they would cover the liability.
However, Patterson argues that when the PPP/C government entered into office, Adams was fired and the “almost finalised” agreement seems to have been set aside.
Instead, Patterson said the government chose to settle for a $2.5 billion for Liza-2 and has plans to pursue an additional $2 billion for Exxon’s fourth major development project, Yellowtail – monetary value he sees as insufficient of covering the full cost of a major oil disaster such as the British Petroleum Macondo oil spill in the Gulf of Mexico that is said to have cost more than USD [$60] billion.
Meanwhile, for the Liza 1 Permit, EEPGL is liable for any spill and environmental upset, despite the subsidiary not having assets to cover any liabilities.
Also included in the motion was also a call to obtain unlimited coverage for petroleum-related disasters as a condition to grant approval for Exxon’s Yellowtail project and any future oil-fields development.
Last November, Vice president Bharrat Jagdeo said, “We are looking at maybe up to US$2 billion of any damage caused here in Guyana, because from the beginning there was no parent [company] guarantee,” for Exxon’s Yellowtail project.
Liza 1, Liza 2 and Payara are Exxon-led projects that were all approved and developed without an agreement on oil spill insurance between the government and EEPGL.
According to Patterson, the increase in oil production offshore Guyana from 120,000 barrels of oil per day (bopd) to almost one million bopd also increases the likelihood of an oil spill, and with the country’s “grossly inadequate” response plan, the environmental devastation could trigger lawsuits from impacted neighboring countries, leaving Guyana bankrupt in the process.
Patterson also made note of the recent announcement by the Government of Peru that Repsol, an oil company also present in Guyana, under reported a 12,000 barrel oil spill at its operation in the South-American country, following which it refused to honor its obligation to clean up the spill.
With the motion, Patterson also makes a call for the government to conduct an independent analysis of all negative impacts that an oil disaster may have on the environment and present the findings in a report to the Parliamentary Committee of Natural Resources so that they can be used as a reference for all other future oil development submissions.
Finally, Patterson’s motion states that the opposition is willing to assist the government to ensure that the process for acquiring unlimited liability coverage for an oil spill from parent companies is back on track.
