Govt. talks up insurance in budget, but ignores coverage for ‘oil spill’

Jan 28, 2022 News

Kaieteur News – The importance of insurance for families and households was passionately touted during the reading of this year’s budget, but there was no mention of an effort to secure insurance for the oil operations in the Stabroek Block.

The Liza Unity FPSO

Addressing the National Assembly during his third Budget presentation since taking office, Finance Minister, Dr Ashni Singh, in announcing as part of measures of relief for Guyanese, noted that as more citizens “enter the world of work and start earning an income, and as their disposable incomes increase, they become better able to make provision for unforeseen adverse circumstances, such as by taking out life and medical insurance.”
According to the minister, “we would like to encourage as many of them to do so, since it enables individuals and their loved ones to better cope with these adverse circumstances when they occur.” To this end, he said government is proposing to allow taxpayers a deduction from their chargeable income for premiums paid for life and medical insurance up to a maximum of 10 percent of their income or $30,000 monthly whichever is lower.
This deduction, he said, will reduce the amount of taxable income and ultimately the tax payable by the Taxpayer, while at the same time secure assurance and assuage the concerns of many citizens on their long term health care needs and the needs of their family in the unfortunate circumstance of their demise.

This measure is projected to cost approximately $1.1 billion, according to Dr Singh. His presentation which included reference to the oil and gas sector on numerous occasion was deafeningly silent on insurance being demanded from the parent companies of the oil companies operating in Guyana’s Exclusive Economic Zone (EEZ).
These include ExxonMobil the parent company for Esso Exploration and Production Guyana Limited (EEPGL), Hess Corporation the parent company for Hess Corporation Guyana and China National Offshore Oil Company’s local subsidiary.
In November last Vice President Bharrat Jagdeo had disclosed to members of the media that efforts are afoot to secure up to US$2B from ExxonMobil to cover any damage that may result from the US$9B Yellowtail Project, the fourth to be developed in the prolific Stabroek Block.
The government’s pursuit of this US$2B commitment comes on the heels of years of criticisms from Kaieteur News and other industry stakeholders regarding the absence of any formal guarantee from ExxonMobil that it would cover in full, the shortfall of costs associated with an unmitigated spill which are not covered by of the subsidiaries.
From the commencement of oil production in December 2019 to the end of 2021, there were 69, one million barrel lifts of oil exported from Guyana, of which 9 were for Government.
With the arrival of the Liza Unity Floating Production Storage Offloading (FPSO) vessel, it is expected that with two vessels in operation this year, it is anticipated that there will be 94 million barrels of oil produced in the block this year from the Stabroek Block.

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