‘Put up or shut up’

Aug 08, 2022 News

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…Former EPA Head challenges EPA, Exxon to publicise oil spill policy

Kaieteur News – As arguments and claims of dishonesty regarding the amount and availability of oil spill insurance for the Stabroek Block rages on between the Environmental Protection Agency (EPA), the agency’s former Chief Executive Officer (CEO) Dr. Vincent Adams and ExxonMobil executives, Adams has once again challenged both parties to put the matter to rest by making public, documentation proving the important policy.

Both the EPA and Exxon have taken shots at Adams who is insisting that before being removed from the EPA, he had set certain motions in place that would have brought Guyana a step closer to managing particularly, the environmental affairs of its nascent oil and gas industry. One vital area is the provision of insurance for oil spills. Adams is accused of dishonestly claiming that he had secured from former Exxon country President Rod Henson, the company and its partners’ commitment to guarantee oil spill coverage pass what its operating company, EEPGL could afford, thus committing to unlimited or full liability coverage.

In response to the accusations, Adams has pointed out that even now, the very commitment exists in all the environmental permits issued to Exxon. He argued however, that the company is just not adhering to the laws and is being allowed to operate by the EPA and the government without the necessary requirements. Adams pointed out that the specific language is available in all Exxon permits; signed by Henson and those who came after. It states at Section 12.5 of the permit that the “Permit Holder must provide from the Parent Company or affiliate companies…one or more legally binding agreements to the EPA, undertaking to provide adequate financial resources to pay…their respective obligations regarding the Stabroek Block if EEPGL or its co-ventures fail to do so.”  At Section 12.4, the Permit also speaks to the EPA reviewing the insurance policy. The “…review is subject to Provision of the amount of cover; supplementary to cover gaps in the primary cover; notification to EPA of modification, cancellation, expiration, intent to renew, renewal or non-renewal and expiry dates of the policy; reports on whether the insurance policy is maintained or renewed for EPA to determine if it is acceptable or if it requires a replacement policy; the final insurance policy or certificate of insurance; and evidence of payment of premium”.

Section 12.3 of the Permit says also that it is subject to Section 12.1, which among several other requirements, include insurance for pollution caused in the course of the Stabroek project… “in accordance with the EPA and the Bank of Guyana.” The document says failure of EEPGL to fulfill the obligation will result in a breach of the permit and immediate termination of same.

“What the above says and signed off by Mr. Henson, is that insurance has to be obtained by EEPGL, plus parent companies Exxon, CNOOC and Hess have to provide written agreements guaranteeing coverage of all costs over and above the insurance value,” Adams said. He charged that, “If insurance plus parent company guarantee to cover all costs over the insurance value is not unlimited/full coverage, I don’t know what is!” Additionally, he pointed out, the guarantee does not cost Exxon, since it’s only a guarantee. Adams reiterated however that, “…the exact language (is) copied into the Payara, Yellowtail and the modified Liza 1 Permits.” He questioned therefore, what more proof is required to highlight that the language for unlimited/full coverage for Guyana already exists.  “You keep trying to fool people with your false line that you are in compliance with the nation’s laws and regulations, but disingenuously keep evading the question as to why you are operating Liza 1 and 2 without meeting those legal requirements enshrined in those Permits,” Adams abraded Exxon. He urged them to explain how they are you in compliance with the nation’s laws when they are operating without meeting the permit’s legal requirements. Adams insisted that, “in the name of transparency… please make public, the insurance policies and the parent company guarantee to meet those legally required Permit conditions to prove your case.”

The EPA has told Guyana that there is a ‘per occurrence’ insurance coverage of US$600M related to oil spills and a $2B parent company guarantee is being worked out. Given the frequency of oil spills in the technically driven sector, and the number of projects on stream and those expected for Guyana in the future, many stakeholders have argued that the sum is inadequate given that major clean ups run into several billion of US dollars. Kaieteur News recently reported that the Insurance Association of Guyana and Bank of Guyana have confirmed that discussions were being held years ago toward facilitating the oil spill insurance policy in-country as is legally required. A locally registered insurance company/broker is supposed to “front” the policy since foreign companies are required to have insurance in-country. Checks have not revealed which local agency holds the oil spill insurance policy.

In a public missive, Janelle Persaud, Exxon’s Media and Communications Manager and Public & Government Affairs said that ExxonMobil Guyana and its co-venturers are responsible for their activities in the Stabroek Block as provided by the Petroleum Agreement, the Environmental Protection Act, and other relevant laws, regulations, and environmental permits.  It is not an insurance company that is liable to the Government for these obligations, but ExxonMobil Guyana and its co-venturers.

To date the EPA, nor the government, has satisfied citizens’ oil spill concerns by detailing the contents of the policy.

 

 

 

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