Latest update November 8th, 2024 1:00 AM
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Majority of Exxon Shareholders unconcerned about oil spills in Guyana
…As Govt. accepts US$2B parent guarantee
Kaieteur News – The majority of ExxonMobil Corporation’s shareholders yesterday voted against two motions that called for a better understanding of oil spill risks and related litigation from the Stabroek Block operations. According to a Reuters report, shareholders overwhelmingly rejected the two proposals brought by separate groups.
The first shareholder proposal was filed by Mercy Investment Services Inc. The group sought to understand the impacts of a worst case oil spill scenario on Guyana and 12 other Caribbean territories that could be affected from an unmitigated oil spill at the Liza Phase One Project.
The second proposal was filed by Anna Marie Lyles of Lot 253 Jefferson Road, Princeton, New Jersey 08540, the beneficial owner of 60 shares for at least three years. Her proposal sought the support of shareholders to request an actuarial assessment, omitting confidential information and prepared at a reasonable cost, of the potential cumulative risk to Exxon Mobil Corporation from current environment-related litigation against the company and its affiliates. Her proposal followed on the heels of Justice Sandil Kissoon’s ruling on May 3, 2023 ordering Exxon to provide an unlimited parent and /or affiliate company guarantee for oil spills. The failure to do so by June 10 would see the Liza Phase One Permit being suspended. That project is currently producing 151,000 barrels of oil per day.
The shareholder in her proposal said, “Clearly, ExxonMobil is not immune to risks of environment-related litigation. However, it discloses what we believe is insufficient information on these risks, leaving shareholders with an inadequate means to assess the future value of their investments.”
She added, that the company should take the steps necessary to provide additional disclosure regarding these risks so that the shareholders are able to properly evaluate potential impact such risks may have on the shareholder value. The shareholder also argued that environment-related litigation poses an increasing risk to oil and gas investments. As an example, she said BP paid more than US$60bn in criminal and civil penalties and remediation costs following the Macondo blowout, while Shell, another oil major, has been ordered by a Dutch court to reduce its carbon emissions by 45% by 2030.
In addition she said, “We have observed a recent trend of courts cancelling energy production permits (e.g. in Australia, South Africa, Brazil), which poses a particular risk for investments in new production. These cancellations allegedly result from non-compliance with environmental laws and the incompatibility of new production with climate goals.”
The shareholder said it is agreed by many Exxon investors that courts may now use as a point of reference the International Energy Agency’s assessment in its 2021 report Net Zero by 2050 that no new oil, gas, or thermal coal projects can be approved by relevant licensing authorities in order to meet Paris Agreement emissions goals. She said, “These environment-related lawsuits are often lengthy and we believe that the direct and indirect risks posed to the business and shareholder value in case of losing some of these lawsuits appear substantial, and shareholders deserve proper disclosure of these risks.”
In the meantime, ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) and the Government of Guyana have finalised discussions for a mere US$2B parent/affiliate company guarantee for oil spills. Both have also filed an appeal against Justice Kissoon’s order for unlimited financial coverage. The decision on their application for a stay of the order will be issued before June 7, 2023.
ExxonMobil’s Houston, Texas headquarters
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