In these columns, we have lamented previously that in relation to the oil and gas industry and particularly in its regulation, the government has conducted itself as if it was one of the partners of ExxonMobil in the Stabroek Block rather than operating as the custodian of all of the interests of the country and its people and the upholder of relevant laws.
In a real sense, the government, as the representative of the state, is indeed a partner with ExxonMobil and its co-stakeholders by virtue of the Production Sharing Agreements (PSA) of 1999 and 2016. Under the latter agreement, the state is entitled to a 2% royalty and from the remainder a 50% share of the profit oil after deductions of up to 75% for cost oil. One can understand that the PPP/C government, just as its predecessor APNU+AFC, would be interested in maximising the country’s take from the oil extraction operations. However, this must not and cannot be at the expense of the environmental and protective stewardship this government must also exercise with equal commitment. It seems that the government’s major stratagem in expanding the country’s take is by allowing the unimpeded extraction of oil from operations that have been approved by regulatory bodies and expanding the number of wells in Guyana’s Atlantic waters.
This is, of course, dangerous and rife with pitfalls. Such a course exemplifies why there continues to be unacceptable flaring of gas from the very first oil extraction platform established by ExxonMobil’s subsidiary, EEPGL – Liza-1 – which has been barrelling away oil since December 2019 and is yet unable to install competent equipment to obviate flaring. Rather than force a minimisation of extraction until this problem could be rectified, the government came up with the unbrilliant idea of assigning a fine for flaring in contravention of sound environmental policy and international climate change commitments. The decision to assign a financial penalty to the flaring is an example of the maximising of revenue ahead of the state’s environmental obligations.
An even clearer case can be made for this in the manner in which approvals for the fourth oil well, Yellowtail were granted by the Environmental Protection Agency (EPA) to EEPGL and which was swiftly followed by its application for a fifth project in the Atlantic – Uaru+. Not to be forgotten is the production licence which was issued by the government two days later. In a letter of April 16 to the EPA published in yesterday’s Sunday Stabroek, environmentalist and geologist, Simone Mangal-Joly has identified lacunae in the Yellowtail process which she says should nullify the awarding of an environmental permit.
She itemised these as follows. First, the failure to disclose the Terms of Reference (TOR) for the Environmental Impact Assessment (EIA) for Yellowtail. Despite protestations from the EPA that it was not bound to publish the TOR, Ms Mangal-Joly noted that the Environmental Protection (EP) Act goes to great lengths in ensuring public input into the TOR for an EIA and it follows that the TOR should be available to the public.
Second, she contended that the EPA illegally deferred the assessment of impacts to the Environmental Permit. For example, she noted that Section 1.3 of the permit specifies that: “The Permit Holder shall conduct an updated targeted marine environmental baselines studies program to develop a robust understanding of the marine environment within the area of influence (AOI) of the Yellowtail project.”
This, it has been argued, by environmentalists should have been completed for the entire Stabroek Block before environmental permits were issued and particularly in light of growing concerns about depletion of fish catches by fishermen.
Third, Ms Mangal-Joly posited that the EPA had failed to publish reasons justifying the grant of the environmental permit. Section 12(2) of the Act, she noted, compels the EPA to account for its decision: “The Agency shall publish its decision and the grounds on which it is made”.
Fourth, she argued that the EPA knowingly failed to select the consultants for the Yellowtail EIA according to the procedures specified in the EP Act. The EPA had sought to defend the hiring ERM on the grounds that it could make the selection on a case-by-case basis whereas Ms Mangal-Joly said that Section 3(a) of the Act is clear that the Agency cannot select the consultants by itself as it must be done “with the assistance of internationally recognized environmental groups” as a means of avoiding bias.
She concluded her letter to the EPA by declaring: “There can be no question that the environmental permit issued to EEPGL for the Yellowtail development is illegal and invalid. Considering the blatant illegalities in the process, I request that the EPA cancels the Permit and restart the environmental impact assessment process in line with the Environmental Protection Act”.
Since the PPP/C government found its stride after taking office in August 2020, questions have grown about the conduct of the EPA. The government set about limiting its capacity and reach by firing its able head, Dr Vincent Adams and then oriented it towards favouring unrestrained extraction of oil when major concerns still exist about the insurance cover available to the country in the event of a spill and the very limited capacity to respond to any untoward event deep in the Atlantic.
If there was any further evidence needed that the government has not elevated regulation of the oil and gas sector to its deserved status there is no need to look any further than the fact that a Petroleum Commission is still to be established. The public must understand that oil is being extracted on a daily basis from two platforms in the Atlantic with a rated total capacity of 340,000 barrels of oil per day yet the government could hardly be moved to act with urgency on the setting up of this Commission. It should be borne in mind also that a Petroleum Commission bill had been sent by the previous APNU+AFC administration to a Select Committee of Parliament for refinement but the process was not completed. During the second reading of the bill PPP/C contributors including now President Ali had commented on its importance and argued vociferously over its shortcomings. A template therefore exists.
Indeed, on August 5th 2020 when he was appointed, Minister of Natural Resources Vickram Bharrat had asserted the importance of the Petroleum Commission and hoped that the bill could be re-tabled as soon as the 13th Parliament began. Unbelievably, more than 18 months have elapsed and there is still no Petroleum Commission and all the while ExxonMobil/EEPGL’s requests have been given priority treatment which included a two-day speed reading by environmental authorities of the voluminous report upon which the issuance of the environmental permit was predicated. President Ali must level with the public.
Ms Mangal-Joly, other environmentalists and civil society advocates must be complimented for the work that they are doing to ensure accountability in the oil and gas sector, tasks that should be properly undertaken by the EPA, the Environmental Assessment Board and any number of other agencies under the purview of the state. Given the very serious concerns raised by Ms Mangal-Joly and others about the Yellowtail process the Natural Resources and Economic Services committees of Parliament should immediately undertake examinations of the process, solicit experts and hold hearings on it with the objective of presenting reports that the government can act on. This was what was envisaged by the constitutional reforms for these committees and whether or not they function assertively will in large measure depend on if the new Leader of the Opposition can inspire MPs from the non-government side of the House to really do their work.
