Hearing for summons to see Exxon’s US$2B parent company guarantee set for January 2024

Dec 25, 2023 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

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Kaieteur News – A summons to see the US$2B parent company guarantee ExxonMobil was ordered to lodge with the courts will be heard on January 9, 2024. The summons was filed by Attorneys-at-Law, Seenath Jairam SC, leading Ms Melinda Janki and Mrs. Abiola Wong-Innings on behalf of Frederick Collins and Godfrey Whyte.

The litigants had filed a case back in September 2022 so that the Environmental Protection Agency (EPA) can be ordered to secure from Exxon Guyana, unlimited liability coverage for oil spills. In so doing, Guyana would be fully protected from any hidden costs associated with an unmitigated spill from one or more projects in the Stabroek Block.

On May 3, 2023, High Court Judge, Justice Sandil Kisson ruled in favour of the litigants and ordered the EPA to secure an unlimited parent and/or affiliate company guarantee for oil spills. To circumvent compliance with that order, Exxon and the EPA through their lawyers, appealed and were successful in staying Justice Kissoon’s decision.

Pending the final outcome of the appeal, Justice Persaud ordered Exxon to lodge a US$2 Billion parent and/ or affiliate company guarantee. Since that order was issued on June 8, 2023, the litigants said their lawyers have been unable to secure a copy of the said guarantee for perusal.

A summons was subsequently filed on November 1, 2023 for orders directing the EPA and Exxon to produce a copy of the US$2 billion guarantee. Attorney -at-Law, Wong-Innis confirmed with Kaieteur News that the hearing would be on January 9, 2024 at 10:00hrs.

Apart from filing the case as a means to securing full oil spill protection for Guyana, Collins and Whyte were not pleased with the existing US$600M insurance package the EPA accepted from Exxon to cover per oil spill incident. This matter was also addressed by Justice Kissoon when he had issued his landmark ruling back in May. In fact, Justice Kissoon found that the country does not have an insurance package from Exxon that meets international standards. This is despite the fact that Exxon tried tirelessly to convince the court that Guyana was in receipt of a credible insurance package from ANCON UK Ltd., an ExxonMobil subsidiary. The Energy Package Policy covers the Liza Phase One and Phase Two Projects.

Justice Kissoon was keen to note that such a policy, which is noted in the press to be US$600M per oil spill event, does not satisfy the stipulation and obligation set out at Condition 14:5 of the Environmental Permit (Renewed and issued on May 31, 2022). Justice Kissoon said the permit for the Liza Phase One Project imposes an express and specific obligation on EEPGL to obtain environmental liability insurance of a certain criteria.

Justice Kissoon said, “It does not constitute what is considered environmental liability insurance ‘as is customary in the international petroleum industry’ and for the petroleum production operations under this Permit. Further, the insurance has not been obtained by the Permit Holder from an insurance company of standing that equates to Grade A Plus.”

The Judge further noted that Condition 14.05 of the permit stipulates as to the type of insurance mandated under this Permit, i.e. “environmental liability insurance of such type and such amount as is customary in the international Petroleum Industry for Petroleum Operations in relation to this Permit… It shall include but may not be limited to insurance in respect of: loss or damage to all assets used in the project; environmental damage caused in the course of the project for which Exxon will be jointly and severally held responsible; loss or damage to property or bodily injury suffered by any third party in the course of the project for which Exxon is liable; the cost of removal of wreckage and clean-up operations required as a result of an accident occurring in the course of permitted activities; Exxon’s liability to its employees engaged in the project; and any other requirements made by the agency.

Justice Kissoon said too that the EPA failed and/or omitted to take any step to hire an independent insurance consultant to guide its actions and conduct as it relates to the quality, type and nature of the insurance demanded by the permit.

He said, “The Agency has further abrogated its function by simply issuing a letter to Esso and to acknowledge receipt of the copy of the insurance. The business of the agency is not a clerical one.”

Given the EPA as well as Exxon’s disagreement with the said findings of the court, appeals were promptly filed. Hearings on their appeals are also set for 2024.

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• Attorneys-at-Law, Environmental Protection Agency, Mrs. Abiola Wong-Innings, Ms Melinda Janki, Seenath Jairam SC

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