By Renay Sambach/Kaieteur News

GEORGETOWN
EnergiesNet.com 02 07 2022

“Guyana obtaining full coverage insurance for the oil and gas sector is very important and we have always wanted that for Guyana; to protect us in the event of an oil spill.” These are the words of Opposition Member of Parliament and Shadow Oil and Gas Minister, David Patterson.

In fact, during an interview with Kaieteur News, Patterson noted that among the several motions that he has in store to be tabled in the National Assembly is a motion calling for full coverage insurance. He noted that this is part of his efforts to secure full coverage insurance for Guyana, before an oil disaster strikes.

Since 2015, ExxonMobil Corporation, the parent company of Esso Exploration and Production Guyana Limited (EEPGL), has steered clear of being tied to full coverage insurance for its Stabroek Block projects, which are certain to deliver multi-billion dollar profits on an annual basis. Instead, it has placed only its subsidiary (EEPGL) on the hook if such an eventuality occurs offshore. This is the state of affairs with its Liza Phase One, Liza Phase Two and Payara Projects.

During the interview, the Opposition MP underscored the importance for Guyana to obtain the maximum insurance coverage, from the parent company of the subsidiaries that are operating in our back yard, and highlighted measures that will be taken by the Opposition to secure same. Patterson said, “EEPGL is just a subsidiary of Exxon, they have no asset in Guyana and not much can come from there. In the event of an oil spill or any accident out there, they [EEPGL] can just declare themselves bankrupt and pack up and go with no liability.” “An oil spill is something major, the ecological disaster it causes, and we also have our fishermen who depend on their catches to support their families,” Patterson added.

To this end he explained that without full coverage insurance, in the event of an oil spill and the company declaring bankruptcy, Guyana will be put in a chokehold to not only foot the expense to clean up the spilled crude but to also get the company to pay for the damages caused.

Moreover, during his presentation in the National Assembly last week, Patterson said that on assumption of office, the People’s Progressive Party Civic (PPP/C) administration reversed the position that Guyana should be financially covered for any and all spills, to little or no coverage at all. “When they reversed the Agreement between the Coalition and Exxon for the company to obtain the maximum insurance coverage on the market with the remainder being covered by the three parent companies,” he added.

According to Patterson, the limited insurance coverage, as against full or unlimited liability coverage “against all risks poses a most severe risk to Guyana, leaving us vulnerable to financial bankruptcy without the means to cleanup any oil spill. Not to mention the nation’s exposure to lawsuits from bordering countries.”

To this end, he used the occasion to remind of the BP oil spill in the Gulf of Mexico, which costed approximately US$70 billion, “and the environmental damage persists.” Patterson posited: “it is rather stunning that with the proposed increase in production, the government is now talking about having Exxon obtain insurance to the value of $2 Billion.”

Such a position Patterson said, begs the question, “did Exxon cancel the $2.5 Billion in private insurance that was put in place under the Coalition? Why would the government feel satisfied with only $2 Billion worth of liability coverage, when the BP spill in the Gulf of Mexico costed more than $70 Billion?”

Additionally he queried, “…if the government is satisfied with only the $2 Billion coverage, how would any costs over and above that be covered?”

Questioned about this issue last week during a news conference, Vice President, Bharrat Jagdeo shifted the attention from himself and government by extension on the matter to say that it is the Environmental Protection Agency (EPA) that is handling this crucial insurance negotiation with Exxon. The Vice President said, “This is an ongoing discussion and it is done mainly at the EPA so that was their position on the table in trying to get US$2B but they have been negotiating this and at the end of the day we will see…I don’t want to give a ball by ball blow but you know the intention and you will see the final product when it comes out and we are pressing hard for that sort of commitment.” Even though American oil explorer, ExxonMobil has faced five years of unrelenting criticism for refusing to provide Guyana with full coverage insurance on its Liza Phase One, Liza Phase Two and Payara Projects, the company appears hell-bent on continuing this trend for its fourth development—the $1.8 trillion Yellowtail Project.

And while Guyana’s government continues to be noticeably silent on the need for full coverage insurance from the parent companies of the subsidiaries operating in Guyana’s basin – making headline in recent news are three oil spill disasters.

The recent one in Nigeria has resulted in approximately 60,000 barrels of crude and a Floating Production Storage and Offloading (FPSO) vessel going up in flames, and the 10 member crew feared dead as their whereabouts remain unknown.

There was also an incident in Peru which saw almost 12,000 barrels of oil being spilled in Peru waters. The Peruvian government has since suspended the operation of the company responsible and imposed an 18-month travel ban on four executives of the company, to ensure that they are in the country in the event of criminal proceedings being brought against them. There was also a recent oil spill in Ecuador which resulted in the Amazon being contaminated. A mudslide which was caused by heavy rainfalls caused a pipeline to burst resulting in two hectares of the Ecuador Amazon and 130 miles of a river being contaminated with crude.

Even as the company that owns the pipeline promised to clean up the oil, the country vows to take legal actions against them.

kaieteurnewsonline.com 02 07 2022