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Jan 27, 2021 Features / Columnists, Peeping Tom
Kaieteur News – The Eastern Caribbean should be extremely worried about the possibility of oil spills from Guyana reaching their shores. Countries such as Trinidad and Barbados should be put on notice that they need to take more seriously the agreements which were signed between them and oil companies since these agreements may not provide adequate insurance coverage to cover their losses in the event of an oil spill.
If a major spill should happen locally, the oil slick can reach the shorelines of these countries and can cause lasting damage and destruction. No one wants this, but it is one of the risks associated with oil production.
Esso Exploration and Production Guyana Limited, has modelled oil spill scenarios. In its Environmental Impact Assessment (EIA), it found, in its unmitigated model, that there is a potential for oil to reach at least portions of Venezuela, Trinidad and Tobago, Grenada, St. Vincent and the Grenadines, and St. Lucia.
In its mitigated model, the EIA suggested that shoreline oiling could reach Trinidad and Tobago and Venezuela as well as into a section of the Caribbean Sea.
Trinidad is less than 250 miles away from the Stabroek Block. Barbados is about 450 miles. Should problems arise with any of the wells and should the oil companies fail to contain any spill, the consequences for both Trinidad and Barbados can be catastrophic.
Oil spills are not easy to contain. The Deep Horizon well took a full month to cap in 2010. By that time almost five million barrels of oil was spilled. Two years after, there were reports that the well was still oozing oil. The oil slick reached as far as Alabama and Mississippi. It is therefore not a remote possibility that an oil spill in the Stabroek Block can reach as far as Trinidad and Barbados.
This will have catastrophic consequences for these two countries. Trinidad is a major shipping hub in the Caribbean and many of its major hotels are located near the Sea. Shipping lanes to Trinidad presently straddle the Stabroek Block.
Barbados depends on tourism for its economic survival. All it will take is a small amount of oil to reach their waters before the alarm bells are sounded. Tourists are going to cancel their plans to go to the island. The economy will flat line. The damage to coastlines and beaches will be extensive, not counting the losses to their fishing industry and coral reefs.
Trinidad has had oil spills before, but it has managed to contain these. It is however hard to say how well that it will manage if the oil spill and slick originates outside of its waters. Last year a tilting oil tanker which was abandoned off Venezuela raised concerns throughout the Caribbean about a possible environmental disaster.
Barbados has not had to deal with any major oil spill. But despite this, it has an oil readiness contingency plan that is well-developed. That plan however is not likely to cater for a spill originating from outside of its waters.
Both Trinidad and Barbados should immediately have discussions with the Guyana government with a view to ascertaining what insurance is in place and its adequacy.
Third party countries would want assurances about clean-up expenses and compensation damages and losses. There is no indication that there is sufficient insurance coverage for this.
Last October, a Stabroek News report had pointed to ambiguities in relation to insurance liability for oil spills. According to the report, the Payara permit merely provides for insurance that is customary for petroleum operations. But there is no universal benchmark as to what level of coverage is customary. Guyana may have gotten a six for nine in this regard
It is also not clear as to which ExxonMobil will become liable, since the agreement was signed with a local registered entity, Esso Exploration and Production Guyana Limited (EEPGL), which limits exposure of the assets of the parent company in Texas.
There has always been a mismatch between insurance coverage and the liabilities which accrue as a consequence of spillages. It is time for that mismatch to be corrected and for oil companies before being granted any licences and permits to ensure adequate insurance coverage. Large countries can afford such mismatches but not poor states like Guyana and those of the Eastern Caribbean.
In the long-run, adequate insurance coverage is necessary and should become mandatory. Otherwise, in the event of an oil spill and in the eventuality of the spill affecting the Eastern Caribbean, Guyana can end up eternally indebted to countries such as Trinidad and Barbados.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
Mineral and oil rich country borrowing to feed, clothe and house its citizens.
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