Jul 24, 2022 News
Govt. shoots down full coverage liability Motion on oil spill…
By Davina Bagot
Kaieteur News – The governing People’s Progressive Party (PPP) late Thursday evening used its one seat majority in the National Assembly to destroy an Opposition Motion, filed by Member of Parliament (MP) David Patterson, seeking full liability coverage in the event of an oil spill. This move, however, has left not only Guyana and its people in grave danger, but also the rest of the Caribbean Region.
This is according to Patterson, who on Friday, during an Alliance For Change (AFC) press conference shared his reaction to the government’s reason for shooting down the Motion.
Patterson’s submission to the House was seeking to not only include full unlimited liability coverage for oil spills and other disasters related to petroleum production, but also direct the Government of Guyana to conduct an independent analysis on the possible ill effects of an oil spill, and present this report to the Parliamentary Committee on Natural Resources to be used as a reference for all other future oil development submissions.
Patterson said, “What was troublesome to me was the comments coming out of the government. One Minister called the Motion trash, and I’m quoting here palpable, non-issue and another person called the Motion calling for coverage to protect our people anti-developmental, and its fear-mongering and that the Opposition was trying to create mischief by the sense of highlighting these issues.”
Given the government’s decision to not require full liability coverage, Patterson who functions as the Shadow Oil and Gas Minister in the House said that the country and the region at large is now left at the mercy of the oil giant, ExxonMobil.
During the debate in Parliament, the MP pointed to the need for Guyana to secure full liability coverage, especially since Exxon has clearly indicated it will only cover “legitimate” and “reasonable” costs when such an event takes place.
To this end, Patterson argued, “besides the callousness of this statement, it is a clear demonstration of the company’s intention to battle in court as to what is a “legitimate” and “reasonable” cost. Sadly Mr. Speaker, we have no grounds to stand on in such an instant of a spill, since there is no baseline study of the existing environmental condition to evaluate damages above that baseline.”
He pointed out that Indigenous and other coastal communities would be exposed to grave danger by simply allowing ExxonMobil to insert the words “legitimate” and “reasonable” in the Environmental Impact Assessments (EIAs), which have clearly indicated in the Yellowtail document for example, that in the event of a medium scale oil discharge there is a 40 percent chance that the entire coastline of Regions One and Two will be impacted.
“Mr. Speaker, if such an oil spill occurs, months, years even decades after such an oil spill, Indigenous riverain villages closest to the Atlantic,” could be impacted, the former Minister underscored, as he warned the government that these families would be forced to go to Court to prove that the damages are reasonable and legitimate. As such, he closed off his presentation by indicating, “you can’t wait fuh tek candle light fuh see things at night when you can see them in the broad daylight.”
The Opposition MP was sure to note as well that the ramping up of production activities will exponentially increase the probability of an oil spill. Such an emergency, Patterson warned, to address clean-up and restoration of ocean and beaches throughout the Caribbean and South American coastlands, could lead to economic bankruptcy. But the troubles for Guyana would not end there. The country’s fishing industry, he said, could be obliterated while aquatic vegetation could also be destroyed all while Guyana could be forced to battle lawsuits from neighbouring countries, due to potential damages.
Even though these specific dangers were highlighted, the government’s side was determined to not let the Motion succeed.
It was the Minister of Natural Resources, Vickram Bharrat who led the arguments against the Motion. Also contributing to the debate from that side of the House were Sanjeev Datadin; Minister within the Ministry of Public Works, Deodat Indar and Minister of Home Affairs, Robeson Benn.
Minister Bharrat said that the administration is aware of how devastating an oil spill can be, hence, provisions have been made to ensure such an activity does not occur. Even if it does, he assured that the oil company has been required to import a capping stack to lay on standby, in the event of such an occurrence. A capping stack is a piece of equipment that is used to place over a blown out well as a cap to prevent further damage that may have been caused.
In providing a legal perspective, the PPP’s Sanjeev Datadin said, “Unlimited insurance presupposes that it matters not what takes place, the insurance coverage will exist. So whether it is one dollar, $1 billion, $100 billion, there would be that coverage. Now perhaps the honourable member can look into what would be the cost. Can you imagine going to an insurance company for coverage that you don’t know how much it’s likely to be? So this becomes an assessment of risk, risk that is unlimited…”
Additionally, he said that there are two “undesirables” when it comes to unlimited insurance. According to him, “it makes the project itself expensive, it is likely to slow down the pace of growth, thereby affecting jobs and revenue to the country. Not only does it cost us revenue to pay for this policy, this unlimited insurance, not only do we have a cost incurred for that, but we actually lose revenue because we are going to go slower. It makes projects that would otherwise be acceptable and financially viable to be no longer financially viable.”
Secondly, Datadin noted that such an insurance coverage would take small companies out of the equation, as they would not be able to afford such insurance.
Meanwhile, Minister Benn during his contribution to the debate said that including full coverage insurance is completely impossible. In fact, he told Patterson that filing such a Motion in the House was a waste of time. He argued, “It is normal in any development for there to be risks. It is normal for any undertaking for those risks to be assessed…it’s completely impossible and so in fact that complete discussion is a complete waste of time and the honourable Member Patterson should be ashamed of himself…”
The final contributor from the government’s side was Minister Indar who argued that the Motion seeking full liability coverage was meant to drive investors away from Guyana. “…What this document intends to do is show you the extremes of what can happen. This, what they have drawn, is the example of the extremes…I suspect and I believe that this motion is designed to chase people out of this country. Literally chase people out of this country.”
He went on to say that, “Any person that runs a business in their right mind frame and sense would never commit to an unlimited liability. The reason being is how do you calculate unidentifiable costs? How in the world does a company do that, to calculate those costs? How do they account for that in their books on a yearly basis?”
A lesson from Nigeria
The Hague Court of Appeal on January 29, 2021 ordered the Nigerian subsidiary of energy giant; Shell, to provide compensation for oil leaks in the Niger Delta that damaged the lands of farmers in villages of Oruma and Goi back in 2004 and 2005. Industry stakeholders who followed the matter for years have said that such a ruling is one that Guyana should pay keen attention to, since it is yet to obtain full coverage insurance for ExxonMobil’s operations offshore Guyana.
The Hague Appeal Court ruling was deemed a victory for environmentalists and especially the Nigerians, whose lands were polluted by the oil. Donald Pols, Director of one of the world’s largest grassroots environmental network, Friends of the Earth, hailed the ruling as a needed victory “for small communities hurt by huge companies.”
It was the Netherlands chapter of Pols’ organisation, which had taken the civil case to court back in 2008.
During the trial, Friends of the Earth lawyers had told the Dutch court that leaking pipes were caused by poor maintenance and inadequate security and that Shell does not do enough to clean up spills.
The Hague Court of Appeal held the oil multinational liable for the spills that spewed oil over a two-mile radius in the two villages as the company could not prove beyond a reasonable doubt that the leaks were caused by damage done by oil thieves rather than its own negligence.
According to Nigerian law, which was applied in the Dutch civil case, the company would not be held responsible if the leaks were as a result of saboteurs.
In addition to compensating the farmers, the Hague Appeal Court also ordered that Royal Dutch Shell must fit a leak-detection system to a pipeline that caused one of the spills. The amount of compensation paid to three farmers in the villages was to be established at a later date.
Gulf of Mexico oil spill
It was 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. A report by a United States news agency, NOLA.com, revealed 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.
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