Startup of Liza Two operations in blatant violation of Permit- Former EPA Head

Mar 21, 2022 News

Kaieteur News – ExxonMobil has started producing oil at its second offshore oil development in the Stabroek Block, the Liza Two development; however, the operator has allegedly violated the Permit by commencing the pumping of Guyana’s oil, without first giving assurance that it will cover costs beyond the insurance offered by its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).

Former EPA Head, Dr. Vincent Adams

This is according to former Head of the Environmental Protection Agency, Dr. Vincent Adams. Adams in a letter to this publication on Sunday detailed that Section 12.1 of the Permit directs that, “The Permit Holder shall have insurance” while Section 12.4 instructs that, “The EPA shall review the environmental liability policy” with determinations to include “amount of cover; notification to EPA of modification, cancellation, intent to renew, expiry dates of the policy; and evidence of payment of premium.”
More importantly, Section 12.5 manifests that the “Permit Holder must provide from the Parent Company or affiliate companies, one or more legally binding agreements to the EPA, undertakings to provide adequate financial resources to pay or satisfy their respective obligations if EEPGL fails to do so”, the former Executive Director of the EPA wrote. To this end, he concluded that Exxon’s US$2 billion insurance must be seen as a “hoax” as it is nothing short of a “distraction” from the company’s noncompliance with the Liza Two Permit.
In fact, he reasoned, “The foregoing provides irrefutable evidence of the legal requirements for insurance, plus a parent company Agreement to cover amounts exceeding the insurance, which the Government and Exxon have dishonourably denied. As such, by their own denial, Exxon and the Government have admitted breaching the Liza 2 Permit by commencing operations in February 2022, without these critical requirements in place.”
As a consequence, Dr. Adams called on the ExxonMobil Guyana President, Alistair Routledge and the government to explain why the nation’s laws were so blatantly disregarded, when production of oil commenced at Liza Two, without the legal requirements for full liability coverage.
ExxonMobil on February 28, last, in a statement to the press, said it wished to categorically state that it has insurance coverage that meets international industry standards for all of its petroleum activities in Guyana.
Exxon explained that its subsidiary, EEPGL, the Operator of the Stabroek Block, was established since 1998, and had, as of year-end 2020, almost US$5B in assets, which is a primary form of financial assurance.
The oil company was keen to note that this is separate from the assets of the other Stabroek Block co-venturers who also have substantial assets and share any liability for response activities. In addition, Exxon said it was working with the EPA, and its co-venturers, to put in place a combined US$2B of affiliate company guarantees.
In an invited comment, the former Head of the regulator body argued that Exxon’s talk of US$2 billion is “irrelevant”, as the company is mandated by the Liza Two Permit to cover costs beyond the insurance policy secured by the operator, EEPGL. He contended, “Macondo has been running in excess of US$70 billion, so US$2 billion is nothing…this here is miniscule to what it could cost (Guyana). Who is going to cover the rest of it? Guyana is going to go bankrupt! Not to mention the additional lawsuits and everything else from neighbouring countries if we wipe out their economies that depend on tourism, wipe out their beaches, their livelihoods and so on.”
Adams pointed out that countries as far as Jamaica, Venezuela and other Caribbean nations may be impacted by a spill that occurs offshore Guyana, while registering his point that US$2 billion is inadequate to cover expenses associated with an oil spill.
A United States news agency, NOLA.com, reported in 2020 that more than $71 billion has been spent for clean-up activities, following the British Petroleum (BP) Macondo oil spill in the Gulf of Mexico. https://www.nola.com/news/business/article_ca773cc0-80f4-11ea-8fbe-ffa77e5297bd.html
The report said that the vast majority of the tab – about $69 billion – has been picked up by BP, while the remainder has been split among Transocean, which owned the Deepwater Horizon, and BP’s drilling partners, Anadarko and MOEX.
However, BP’s tally could still rise. A number of large business claims are still pending in federal court. The company’s settlement with individuals who filed medical claims immediately after the accident requires BP to pick up costs well into the future. And more recent lawsuits filed by hundreds of individuals with late-occurring health effects are still pending.
BP also agreed to pay $4.9 billion to five states over 18 years for economic and other non-natural resource losses, and another $1 billion for claims of more than 400 local government entities. The oil company, British Petroleum, had a blowout a mile under water, which sent oil and gas surging up to the Deepwater Horizon exploration rig, setting it on fire, sinking it and even killing 11 crew members. The well leaked for 87 days, pouring at least 3.19 million barrels of crude oil into the Gulf of Mexico.