Guyana should not have to go to Court for Exxon to pay for damages when Permit demands parent guarantee – David Patterson  

May 28, 2023 News

Kaieteur News – Shadow Natural Resources Minister, David Patterson does not believe Guyanese should be subjected to the Court system in seeking compensation from ExxonMobil after an oil spill.

Shadow Minister of Natural Resources, David Patterson

Patterson in an invited comment on Saturday was responding to the statement made by Vice President Bharrat Jagdeo, during his recent press conference, that Guyana would go to Court to seek compensation from the oil giant in the event of such an unfortunate incident.

According to the former minister, the United States of America (USA)- the home country of ExxonMobil- as well as other Western countries abide by the ‘polluter pays principle’ and are self-insured.

He explained, “In those countries, they have to pay in full for all the clean-up costs, without limits. Court cases are only necessary for claims outside of the clean-up, for example, villages can make a claim years later for reduced fishing catches (but) they have to prove that claim.”

To this end, Patterson urged that the situation in Guyana should be no different. In fact, the Parliamentarian pointed out that Exxon is required under the Liza Phase One Permit to supply the nation with a Parent Company Guarantee to cover the costs associated with a spill that is not covered by the limited insurance policy.

“The main reason, in my opinion, that the Government is fighting to protect Exxon, is because they knowingly approved Exxon’s request to pump higher volumes than the FPSOs (Floating Production Storage and Offloading vessels) are rated for.  Exxon may have explained the financial benefits, but may have requested that Guyana takes the risk for this increased production above the name plated levels,” he reasoned.

The former Minister told Kaieteur News that ExxonMobil should honour its obligations and pay in full for any costs associated with cleaning up an oil spill. At the same time, he noted that Guyanese should still reserve the right to carry the company to court for matters other than the clean-up costs.

ExxonMobil Corporation’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), is the operator of the Stabroek block which has an estimated 11 billion barrels of oil.

EEPGL along with its co-ventures Hess Corporation and China National Offshore Oil Corporation (CNOOC) has been operating in the Stabroek Block with a mere US$600 million insurance package given to the country. To complement this, Guyana’s Environmental Protection Agency (EPA) has since agreed to accept a US$2 billion parent company guarantee from ExxonMobil and is poised to receive supporting documents on this front soon.

During his press conference on Thursday, Vice President Bharrat Jagdeo was asked, in the event of an oil spill offshore Guyana, what will the Government of Guyana (GoG) do to ensure that Guyanese do not have to foot the bill.

The Vice President explained that looking at what has happened globally with other countries when it comes to oil spill, most of the US-billions of dollars that countries get are from taking the oil companies to court and winning the case.

He continued, “they didn’t come because the companies are voluntary, even in the US (United States of America)…and in the UK (United Kingdom). So I see figures quoted (US) $85B and (US) $50B and if you look at it, it wasn’t for the cleaning up of the spill but the compensation and a lot of those didn’t originate because of guarantees they emerge from court cases.”

Jagdeo also said, “whatever guarantee Exxon gives at the end of the day it comes back to we will pay for it.” The Vice President explained that he expects there would be litigations and that is how he anticipates it would be dealt with.

Government recently appealed the May 3, ruling by High Court Judge, Justice Sandil Kissoon, who ruled that Guyana’s EPA should secure unlimited parent guarantee from ExxonMobil Corporation for a major oil project producing over 150,000 barrels of oil daily in the Stabroek Block. Vice President, Jagdeo had contended that such a ruling could affect investment in Guyana’s oil and gas sector and kill the momentum; as such they appealed the ruling.

• court, Guyanese, oil, Permit, spill