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Insurance for gas pipeline to come at the appropriate time – Jagdeo
Kaieteur News – Amidst the security threats posed by Venezuela to this country, the subject of insurance for the massive gas pipeline being undertaken by American oil major, ExxonMobil has been a concern.
During a media engagement on Thursday at the Office of the President, Vice President Bharrat Jagdeo was asked to provide an update on the status of the insurance, given that ExxonMobil is progressing with the construction of the 12-inch pipeline. That structure will be used to transport gas from the Liza One and Two Fields in the Stabroek Block to the Wales development site, West Bank Demerara.
Jagdeo in his response said “No, no. Not now, not now… I’ve dealt with insurance issues etcetera 100 times, I’m not dealing with that anymore. We are dealing with the defence of our country and that’s important now.”
Vice President Bharrat Jagdeo responding to questions during his press conference yesterday
Even though the VP responded to questions relative to Trinidad and Tobago’s gas deal with Venezuela, he told this newspaper that he was “dealing with the defence of our country”. In fact, he went further to note that “at the appropriate time, every asset that we have, including a pipeline, the power plant and the NGL (Natural Gas Liquids) facility will have the insurance.”
The Gas-to-Energy (GTE) project is geared towards reducing the cost of electricity by 50 percent. Exxon was granted a Permit by the Environmental Protection Agency (EPA) for the 225 kilometers (km) pipeline back in November last year. The legality of this Permit is currently the subject of a court challenge by two Guyanese.
The pipeline is expected to cost US$1 billion. Last year, a local insurer highlighted the need for insurance during the construction phase of the project. The company that spoke off the record to this newspaper explained, “Everywhere in the world once a project is engaged, what happens is that you have insurance that literally covers the project while it is in the form of being carried out.”
According to the insurance company, this coverage is called ‘Construction All Risk’ and is taken out by the contractor that has been hired to complete the job. The credible source explained, “Technically it’s in your care, custody and control until you hand it to me as a finished product. You have problems and your problems are the construction while you are working, that material is worth money so if that material is destroyed while it is in your care, custody and control, you have a problem and your problem is to reimburse me, the owner (if something goes wrong). So how would you do that unless you have coverage for it?”
It is for this reason that the insurance firm stressed the need for coverage at all points during the construction phase to ensure all of the assets are secured.
Despite this revelation, the government remains adamant that the project will be insured upon completion of the other aspects- the NGL and power plants. Those two plants are being constructed by the state.
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