Oct 19, 2020 News
Kaieteur News – Whenever oil companies set out to acquire and develop resource fields, their host governments would do well to ensure that the cleanup and liabilities for any environmental disaster are set to be taken care of by a capable and lauded insurer with the track record and finances necessary for the job.
Why so? Because oil spills, like many other disasters known to occur in this industry, have devastating and lasting effects. These disasters are so grave that they wound the ecosystems and economies of multiple countries, costing billions of US dollars. Some nations never fully recover.
With this in mind, any President signing deals away to oil companies would be expected to secure provisions which ensure that the country is always protected. Former President and Minister of Petroleum, Donald Ramotar did not. When he signed away the Canje Block on March 4, 2015, Ramotar not only granted the block to a company without the track record, finances and capacity to acquire and develop the ultra deepwater block, but he also gave this local company the right to self-insure against the possibility of some of the most devastating man-made disasters the world has ever seen.
This means that if an oil spill were ever to be realized under that arrangement, a company like Mid-Atlantic (the recipient of the block) could claim bankruptcy because it simply does not have the money to handle such a disaster.
The problem would then fall squarely within Guyana’s laps. Guyana would then be potentially indebted to its neighbouring states for generations to come, for destroying their marine ecosystems, the livelihoods of their fishermen, their food sources, and their tourist economies – in addition to struggling to clean spills within its own borders.
According to the Canje agreement, the Minister with responsibility for Petroleum could grant the contractor this right to self-insure.
In February last year, Head of the Energy Department, Dr. Mark Bynoe said that there would be no approval for companies to self-insure.
At the time, the Government had wrestled with a similar issue in ExxonMobil’s Stabroek Block production sharing agreement. The oil major eventually assured the government that it will stand liable for any oil spill in that block.
However, Guyana remains unprotected against disasters in the Canje Block.
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