…Secures US$2B Insurance Policy from company’s subsidiary to cover oil spills
…Says Exxon agrees to correct Liza Phase One Permit with insurance
“When you are doing oversight, you are supposed to be able to make unannounced visits. If you give them seven days notice, they can make it look like the best is taking place… The element of surprise is necessary, it is effective.” – EPA Head
By Kiana Wilburg
According to the Production Sharing Agreement (PSA) between Guyana and ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), the Minister through his duly appointed representatives, must give the company seven days notice before making a visit.
But this will not apply to the Environmental Protection Agency (EPA). Confirming this with Kaieteur News was EPA Head, Dr. Vincent Adams. He was at the time, responding to questions regarding this provision and how it will affect the scope of EPA’s regulatory powers.
Dr. Adams said, “I am aware that the agreement calls for seven days notice but the EPA will not be bound by this. The agency has the authority to visit the site and they (Exxon) have agreed that our designated officer will be granted entry at all or anytime. This provision was included in their permit for Liza Phase Two. This is not something out of the ordinary for regulators of the sector. In fact, it is in keeping with international best practices, which Exxon is very much familiar with. So when we put it to them, there was no objection from Exxon, they said they understand.”
The EPA Headed added, “When you are doing oversight, you are supposed to be able to make unannounced visits. If you give
them seven days notice, they can make it look like the best is taking place… The element of surprise is necessary, it is effective.”
An alternative Dr. Adams is familiar with from his 30 years of service at the US Department of Energy (DOE) is having on site representatives. Questioned to say if he would be making use of this option in Guyana, Dr. Adams answered in the negative. He said, “I am not considering that at the moment. Guyana does not have the resources for that right now.”
Turning to the issue of liability for oil spills, the main issue that delayed the granting of the Liza Phase Two permit, Dr. Adams was pleased to report that ExxonMobil has complied with his requests on this matter.
Dr. Adams said, “They have submitted documentation and an insurance policy from a reputable British company to the tune of US$2B. This is for EEPGL…They have been quite compliant in working with us on this matter. They were responsive in addressing the issues we pointed out, with the major one being insurance.”
The EPA Head who is currently in the USA said that when he returns, the permit should be finalized and granted to the Stabroek block operator by March 1.
Kaieteur News also asked Dr. Adams yesterday about fixing the Liza Phase One Permit, which does not have an insurance policy or documentation from Exxon’s subsidiary.
The EPA Head said, “I spoke with them about this and they are open to reworking the Liza One Permit…They are willing to accept international standards on this matter and are willing to work along with us in this regard. We will accept nothing less. You can’t have two permits with different provisions and they understand that. I don’t see any resistance from them on this issue.”
In the meantime, the Energy Department has initiated discussions with Central Bank to ensure oil companies comply with the nation’s laws on having a recognized insurance policy. Making this known a few weeks ago was Energy Department Head, Dr. Mark Bynoe. He said that there will be no approval from the Department of Energy for companies to self insure.
Dr. Vincent Adams has expressed on several occasions that self-insurance by oil companies is not ideal for Guyana.
Also in agreement with his position is Founding Director of Mexico’s Agency for Security, Energy and the Environment (ASEA), Carlos De Regules. During an interview with Kaieteur News, Regules insisted that it would be in Guyana’s interest to make insurance policies mandatory for the oil and gas sector.
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