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US$2B guarantee provided by Exxon is for the entire Stabroek Block – Country Manager
By: Davina Bagot
Kaieteur News – The US$2 billion affiliate company guarantee, reportedly lodged by ExxonMobil, provides coverage for the entire 26,800 square kilometers Stabroek Block.
ExxonMobil Guyana’ Country Manager, Alistair Routledge
This was the response shared with Kaieteur News by Exxon’s Country Manager, Alistair Routledge as he explained that a “parent guarantee” for the company’s fifth project, Uaru has already been provided to the regulator of the oil and gas sector, the Environmental Protection Agency (EPA).
The Uaru project is expected to produce 812 million barrels of oil equivalent resources in the initial 20-year licensed period through a total of 44 wells – 21 producers and 23 water and gas injectors.
The floating, production, storage and offloading (FPSO) vessel, Errea Wittu, which will be built by Japanese FPSO-building and operating company, MODEC, will produce 250,000 barrels per day at peak production from around the second quarter of 2027.
By then, Guyana’s overall production rate is anticipated to be over 1,100,000 barrels of oil per day from the Stabroek Block.
According to Section 14.2 (C) of the Uaru Permit, the Permit Holder is required to provide to the State a combination of Financial Assurance, including “a Parent Company/ Affiliate” guarantee.
To this end, the Country Manager explained, “Under that environmental permit, you are correct that we have to have that US$2B coverage but it is the same coverage, the same block-wide coverage. It’s the same nature of operations, if an incident ever happens, would it be renewed, of course.”
The company was ordered by Justice Rishi Persaud to lodge a US$2B oil spill guarantee as the Appeal Court is yet to hand down its ruling on the matter of full liability coverage or an unlimited parent guarantee to cover all costs associated with a spill.
Two citizens, Frederick Collins and Godfrey Whyte, had taken the EPA to Court for failing to enforce the provisions of the Liza One Permit, for Exxon’s first sanctioned project.
They argue that the Permit requires an unlimited parent guarantee that protects the nation from standing the costs of an oil spill.
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.
Even as that document remains a mystery, it would be poignant to note that though an oil spill can have transboundary impacts and affect as many as 12 Caribbean islands, the guarantee lodged by Exxon does not cover those costs. Read more here: https://kaieteurnewsonline.com/2023/05/21/us2b-parent-guarantee-only-to-cover-oil-spill-damage-to-guyana-exxon-guyana/
At a previous press engagement, Routledge explained that the guarantee to be supplied by EMGL’s- formerly Esso Exploration and Production Guyana Limited (EEPGL)- parent was determined by an independent consultant. The bill for that service was handled by Exxon. Routledge said too that the sum was arrived at taking into consideration all “credible and reasonable costs” that are likely to arise during an unmitigated oil spill scenario at the Liza Phase One Project.
Notably, Exxon’s Country Manager did not respond to Kaieteur News’ question at the time on whether the company is willing to make public, the data and information used by the independent consultant who found that US$2B is a sufficient parent guarantee for the Stabroek Block.
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