Govt. should require oil companies to develop environmental protection plans – Natural Resource Charter

Jun 04, 2018 News

…Says this must also include provisions for compensation

Chartered Accountant, Chris Ram

By Kiana Wilburg

When oil and gas activities are mismanaged, there can be irreversible environmental damage. This can give rise to local grievances and conflict.
It is for this reason that the Natural Resource Governance Institute (NRGI) believes that all governments must require of oil companies, comprehensive environmental protection plans which speak to compensation when necessary.
The NRGI is an independent nonprofit organization dedicated to improving countries’ governance over their natural resources to promote sustainable and inclusive development.
According to the Institute, governments should require companies to develop wide-ranging environmental management plans that clearly propose the method and means of managing, mitigating or offsetting each impact identified in the assessment, throughout the project cycle.
NRGI also stated that the government should require companies to be prepared for major accidents and disasters. In this regard, it stated that emergency and disaster preparedness should protect both the operations site and affected populations. The Institute said that companies should demonstrate strategic readiness for collaboration with the government including an effort to coordinate responses with local government services including the police, military, health service and environmental protection agencies.
As for compensation, the Institute noted that this can take several forms, one of which includes direct compensation to specific individuals or communities affected by operator’s pollution.
Regardless of which form it takes, the Institute said that in order to be effective, a compensation process must be credible, transparent, universally applied, efficient and fair.
VAGUE TERMS
There are many examples around the world where the governments of nations ensure that oil companies provide insurance, which would ensure compensation for any impact on communities and neighbouring countries due to the said operations. Unfortunately, Guyana is not one of those nations.
In the Production Sharing Agreement (PSA) signed between the Government of Guyana and USA oil giant, ExxonMobil, there is no provision regarding any adverse impact on coastal communities or on neighbouring countries.
This alarming observation was recently pointed out by Chartered Accountant, Chris Ram and political Commentator, Ramon Gaskin. The two have been extremely critical of the vague terms in the contract especially as it relates to environmental protection.
Ram in his recent writings noted that Article 20.2 of Guyana’s 2016 Oil Agreement deals with Insurance in respect of but not limited to assets, pollution, third parties and employees.
The Attorney-at-law pointed out that the Agreement does not require any loss of production insurance as will apply in the case of any major disruption of production or environmental accidents. He said that while this provision is absent from the 2016 Agreement, the 1999 Agreement, which was signed by the Jagan administration, allowed for insurance to be taken out by Esso Exploration and Production Guyana Limited’s affiliate insurance company. Esso is a subsidiary of ExxonMobil.
Ram stated that, “That requirement has been changed and now allows the Contractor to have the right to self-insure against the risks identified. This is a major concession by (Natural Resources Minister, Raphael) Trotman on an issue that only specialist lawyers know about. What it means in practice is that anyone seeking to make an insurance claim will have to lodge that claim against Esso, CNOOC/Nexen or Hess, all of which are external companies. Those potential claimants must thank Raphael Trotman for making their chances even more difficult to succeed.”