Government approves environmental permit for 5th oil project

Apr 28, 2023 News

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– ExxonMobil has 30 days to provide parent guarantee

Kaieteur News – Vice President, Dr. Bharrat Jagdeo revealed yesterday that an Environmental Permit for ExxonMobil’s fifth project at the Uaru field in the Stabroek Block has been approved. The Uaru project is expected to cost US$12.7B and produce about 250,000 barrels of oil per day after coming on stream in 2026.

With the environmental permit being issued, Dr. Jagdeo said ExxonMobil is expected to provide a parent guarantee within a month’s time. This form of financial assurance would be used to cover any costs pertaining to an oil spill. He said the oil giant has to receive approval from its shareholders on this matter. The official said, “Hopefully, that will be done shortly but the wording on everything and everything else for the agreement has been settled.”

In a separate and detailed statement, the EPA said that the permit is armed with several robust provisions covering several matters.

The regulator said the five-year Environmental Permit for Uaru strictly prohibits routine flaring and venting, and specifies that flaring is only permissible during commissioning, start-up and special circumstances. The permit also maintains that payments must be made by the permit holder in instances where flaring is conducted beyond permitted durations.

On the matter of how produced water is to be treated, the permit holder which is Exxon affiliate, Esso Exploration and Production Guyana Limited (EEPGL), is required to ensure that the oil content specification of produced water to be discharged does not exceed 42 mg/L on a daily basis or 29 mg/L on a monthly average. (Note: Produced water is a term used in the oil industry or geothermal industry to describe water that is produced as a byproduct during the extraction of oil and natural gas, or used as a medium for heat extraction.)

Further, the permit requires EEPGL to examine and develop a plan for a phased reduction of oil content specification of produced water to levels lower than the above standards and in keeping with Good International Petroleum Industry Practices.

With respect to liabilities, the document states that EEPGL and its partners shall bear all costs of the restoration, rehabilitation and compensation required as a result of damage incurred due to an oil spill or other emergency resulting from the execution of the Project.

Kaieteur News understands that the costs herein referred to shall be independently assessed and evaluated by a third-party determined by the EPA. It also states that nothing shall prejudice the right of public and private actors to pursue criminal and/or civil action against the permit holder.

Furthermore, the document states that the permit holder is liable for all costs associated with clean up, restoration and compensation for any damages caused by any discharge of any contaminant, including the cost of all investigations into pollution incidents or discharge of contaminants, conducted at the instance of the EPA.

It also states that the permit holder shall compensate any person who suffers any loss or damage as a result of any contravention of the Environmental Protection Act. This newspaper also observed that the permit holder, his servants and/or agents shall be jointly and severally liable for any negligence or willful misconduct which causes harm to the environment, biodiversity, protected species and natural habitat.  Additionally, EEPGL and its related parties can be liable jointly and/or severally for any gross negligence or willful misconduct to the marine environment, biodiversity, protected species and natural habitat with respect to any release or discharge, spill, contaminant fluids, oil or lubricants any facilities permitted under this project.

Importantly, the permit holder, his servants and/or agents can be liable jointly and/or severally for environmental damage due to pollution from its activities within Guyana, its territorial waters, contiguous zones, continental margins continental shelf, and Exclusive Economic Zone, inclusive of damage to the marine environment, biodiversity, protected species and natural habitat with respect to any release or discharge, spill, or contamination which is attributable to the Permit Holder and his agents or contractors. This is in accordance with Section 49 (1) of the Maritime Zones Act 2010 and is subject to any other existing or forthcoming laws, regulations and standards governing the protection of the marine environment.

The permit also states that EEPGL shall provide to the State, within a reasonable time of signing of this permit, a combination of various forms of financial assurance to cover all its legitimate environmental liabilities under this permit. These shall include:  Insurance to cover well control, and/or clean up and third-party liability on terms and in adequate amounts of coverage that are market standard for the type of Insurance; and a written declaration of EEPGL’s and its Co-Venturers’ financial capability to fulfill all liabilities.

The required declaration shall be accompanied by EEPGL’s and each Co-Venturers’ statement of financial position for the preceding year indicating each Companies’ assets, liabilities, equity, and such further financial information, as may be necessary.

The permit holder is also required to provide one or more guarantee agreement(s) in which the parent company or affiliate companies of permit holder and its co-venturers (“affiliates”) shall undertake to promptly and within 30 days, upon notice of default, provide adequate financial resources for the permit holder and its co-venturers to pay or satisfy their respective environmental obligations regarding the Stabroek Block. The companies are also required to indemnify and keep indemnified the EPA and the Government of Guyana, against all such environmental obligations regarding the Stabroek Block.

Kaieteur News understands that one key condition for approval was the conclusion of negotiations on the parent /affiliate company guarantee referenced above. This is expected to be executed shortly with the signature of the guarantor and beneficiary.

In seeking to ensure EEPGL meets its obligations to prevent and mitigate environmental harm, the permit also imposes comprehensive requirements for monitoring and management of any impacts affecting biological, physical, and socio-economic resources within the Area of Influence of the project.

The permit also requires EEPGL to submit safety case information, including a risk assessment prior to drilling and development of wells. The full text of the Uaru Permit is available for download on the EPA’s website at www.epaguyana.org.

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• Dr. Bharrat Jagdeo, Environmental Permit, ExxonMobil’s Field Development Plan (FDP), Uaru, Vice President

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