Latest update April 25th, 2024 12:53 AM
Mar 14, 2023 Letters
Dear Editor,
The Environmental Protection Agency (EPA) stresses that its work is guided first and foremost by the Environmental Protection Act and its suite of Regulations. The EPA has noted the repeated and deliberate publication of glaring misconstructions of several facets of its work. Considering their frequency and magnitude, the EPA moves to correct these misconceptions in the public’s interest.
Provisions of the Liza I and Liza 2 Permits and improvements to date
The Permit for the Liza 2 Project is indeed almost a replica of the Liza 1 Permit. Clearly, the EPA saw merit in repeating in the Liza 2 Permit, almost all of the conditions of the Liza 1 Permit.
As an example, the EPA from the onset, prohibited routine flaring in the Liza 1 Permit and this stipulation which was retained in all Permits. Subsequently and after 2020, the EPA has continually improved its regulation of flaring. For instance, the EPA imposed a tax for flaring under non-routine upset conditions. This environmental control instrument is congruent with the Environmental Protection Act Cap 20:05 and is a deterrent commonly used in regions across the world to achieve environmental compliance.
As another example, the Liza 1 Permit stipulated that produced water discharges meet the World Bank/IFC standards for oil in water at 42 mg/L per day and 29 mg/L average per month. This condition was also retained and in all subsequent Permits.
Beyond the examples mentioned, many other conditions stated in the Liza I Permit have been retained in the subsequent Permits. The key point is that the EPA is always learning and improving, and its work is not about any one person within or external to the EPA.
As anyone will appreciate, with new and improved understanding of the oil and gas sector, a modern regulator will make appropriate changes as necessary to improve and ensure robust regulation of the sector. This is clearly demonstrated in the Permits issued subsequent to the Liza 1 and Liza 2 Permits, such as, the Permit for the Yellowtail Project and the Renewed Permit for the Liza 1 Project. The latter Permits both reflect significant improvement through the inclusion of the following requirements:
Self-insurance
The Liza 1 Permit indeed relied on self-insurance. This was entirely congruent with the terms of the 2016 Production Sharing Agreement (PSA) which was entered into with the Petroleum Contractors. Further to this, it was understood that this form of Financial Assurance was customarily used in the international petroleum industry, and indeed it is. A precursory search of “financial assurance for oil spills” will show that this is a commonly accepted form of assurance.
Further, it is unheard of to this day, to reasonably require “unlimited coverage” insurance. Insurers are disinclined and have never provided this level of coverage. Clarification sought from local insurers would confirm that there is nothing like unlimited or full cover insurance where liability is concerned because one cannot put an exact number to future/potential claims. If there is any insurer that provides or there are examples of unlimited Insurance or a Guarantee already given, the EPA is open to receiving this information towards informing its current negotiations.
Further, it must be emphasized that beyond Permit conditions, and the Environmental Protection Act which address the liability of Permit Holders and ensure that environmental damage will not go unpunished or unremedied, through the vicarious liability principle, a Parent Company can be held liable for unfulfilled obligations (default) of its Subsidiary.
The EPA assures the public that it has not and will not shy away from examining and identifying appropriate and other effective forms of Financial Assurance for oil spill and other environmental liabilities. This work is ongoing and when completed, the public will be duly updated.
Regards,
Aretha Forde
Senior Environmental Officer
Environmental Protection Agency
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