- Judge orders Exxon to provide ‘unlimited’ oil-spill guarantee
- Guyana has become a major production zone for the oil giant
Kevin Crowley, Bloomberg
EnergiesNet.com 05 05 2023
Exxon Mobil Corp. has breached its environmental permit in Guyana for failing to provide adequate oil-spill insurance, the nation’s High Court ruled.
Exxon has until June 10 to provide an “unlimited” guarantee that the oil giant and its partners will be responsible for all clean-up costs if there is a spill in the consortium’s area of offshore operations, Justice Sandil Kissoon wrote in a ruling Wednesday. The court also found Guyana’s Environmental Protection Agency in breach of its duty to enforce Exxon’s environmental compliance.
Exxon is “reviewing the court’s decision and evaluating potential next steps,” the company said in a statement.
Guyana, located on the northern coast of South America next to Venezuela, has become one of the world’s fastest-growing oil producers after Exxon first discovered crude there in 2015. Exxon-led installations in the Stabroek region are pumping 360,000 barrels of oil daily, a figure that’s forecast to triple by the end of the decade.
The country is now a key production zone for Exxon and a major reason why its stock has outperformed peers in the post-pandemic era. Exxon is the operator of the Stabroek block and holds a 45% stake, while Hess Corp. owns 30% and China’s CNOOC has 25%.
In a strongly worded ruling, Kissoon criticized Exxon for pushing ahead with production plans while failing to abide by environmental rules.
Exxon “engaged in a disingenuous attempt which was calculated to deceive when it sought to dilute its liabilities and settled obligations stipulated and expressed in clear unambiguous terms,” Kissoon wrote. The company’s actions were “made permissible only by the omissions of a derelict, pliant and submissive Environmental Protection Agency.”
Lawyers for the applicants, which include the Transparency Institute of Guyana, celebrated the decision.
“This is a good, solid, modern decision by a judge who is well up to date with current legal principles and understands the role of the judiciary is to uphold the rule of law and protect the nation and its citizens,” said Melinda Janki, a lawyer who worked on the case.
Exxon shares declined 1.3% to $106.57 at 2:40 p.m. in New York trading. Hess dropped 2.6%. Brent crude futures fell as much as 1.5% before clawing back those losses.
“It’s disappointing the court failed to appreciate and acknowledge the financial capabilities of ExxonMobil Guyana and its co-venturers to meet their obligations, the insurance we already have in place, and the progress toward agreeing to a guarantee that exceed industry benchmarks,” Exxon spokeswoman Meghan Macdonald wrote in an email.
bloomberg.com 05 04 2023