Amid continuing concerns here about whether it has been legally bound to full insurance and compensation for any oil spill here , ExxonMobil’s affiliate Esso Exploration and Pro-duction Guyana Limited (EEGPL) yesterday said that while such an occurrence is highly unlikely here, the company and partners will not shun their responsibility.
The company also wanted to make it clear that the US$2 billion insurance sum for the Liza developments in the Stabroek Block is not to be used for cleanup in the event of a spill, but rather, is a package of affiliate company guarantees that goes directly to this country, in the “highly unlikely” event that resources from EEPGL, Hess and CNOOC (China National Offshore Oil Corporation) are totally depleted.
“EEPGL and the other co-venturers are responsible if a spill happens, and we’ll act as quickly as possible to address any environmental incident. In our view, the fact that we’re a world-class operator, makes a major spill very unlikely. But if one were to occur, we have the financial and technical resources to address it,” Vice President and Business Services Manager, Phillip Rietema, yesterday told a media roundtable discussion.
“So if EEPGL, Hess, CNOOC, if we all default, very very unlikely… then we’re also providing guarantees from other companies within our group, that would be for the benefit of Guyana,” he also stated.
The 2010 Macondo well blowout in the Gulf of Mexico that cost British Petroleum an estimated US$60b has been held up as an example that ExxonMobil would have to be prepared to address financially and in terms of insurance.
The Environmental Protection Agency (EPA) and the company should soon come to a decision on the issue as Rietema said that “It’s very close [to being concluded]. Very, very soon. Final details are being worked out.”
Rietema echoed positions taken by country president of ExxonMobil Alistair Routledge and assured that should there be a spill, the company will not wait on insurance claims to be activated, but that it has an immediate response system utilising resources at its disposal.
“The value of insurance will not limit the company’s ability to respond to an event, and response activities would certainly not be delayed by discussions with insurers. We have the financial capacity to meet our responsibilities for an adverse event and we are committed to paying all legitimate costs in the unlikely event of an oil spill,” Routledge had said.
“Here in Guyana, we adhere to an internationally accepted, tiered response system used to determine the requirements of res-ponse personnel and equipment. This system remains aligned with the principles of the International Convention on Oil Pollution Preparedness, Response and Cooperation (OPPRC), the Caribbean Island Oil Pollution Pre-paredness 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,” he added.
He had also disputed the claim by former EPA Director, Vincent Adams, that the company had a US$2.5 billion insurance agreement.
Adams in a letter had contended that while he was heading the EPA, ExxonMobil had agreed to an insurance sum of US$2.5 billion and beyond for the Liza-2 oil-producing platform which began operations last month.
Of note, according to Adams, when the company had agreed to the sum, EEPGL had no assets.
However, the company boasts that it now has over US$5 billion in assets.
While not naming Adams, Routledge disputed the claim and said that the numbers and report given are incorrect as it did not explain that the documents submitted then included the company’s joint insurance programme with project-specific insurance policies.
“Unfortunately, the limits in these various policies have been incorrectly conflated in some media coverage. ExxonMobil Guyana and its co-venturers will respond technically and financially in the unlikely event of an incident and have a robust oil spill response plan in place. Suggestions otherwise are baseless,” Routledge said.
Adams had also quoted the Liza 2 Permit and had pointed to Section 12.5 which states, “Permit Holder must provide from the Parent Company or affiliate companies…one or more legally binding agreements to the EPA, undertaking to provide adequate financial resources to pay or satisfy their respective obligations if EEPGL fails to do so.”
In his latest letter on the issue and following Routledge’s response, Adams said that the matter can be put to rest by the company producing the documents it submitted to the EPA when he was there.
“I once again call upon Exxon to release the documents required by the Permits for all to see, and prove that the Liza 2 Permit was not violated by not submitting these documents before start-up. Failure to do so, requires an independent investigation, because of lack of trust and because there is no telling what other laws are being broken, exposing the country to dangerous risks,” he wrote.
Like Routledge, Rietema said that the affiliate companies Hess and CNOOC, have provided what is required under the permit.
“We’ve procured industry standard insurance, for the benefit of ExxonMobil Guyana and the co-venturers. So if we have costs associated with an environmental incident, after we pay for those expenses, we could then go to our insurance companies and file a claim against our policy, and they would reimburse us for these expenses,” he said
“We have insurance that is for our benefit. If we do not address all of the environmental obligations, then we have affiliate company guarantees. That $2 billion, that would be for the benefit of Guyana,” he noted.
