New Liza 1 permit paves way for Exxon to cap oil spill liabilities at $2B
New Liza 1 permit paves way for Exxon to cap oil spill liabilities at $2B
Former Head of the EPA, Dr. Vincent Adams
– former EPA boss says current document a “hoax”
By Zena Henry
Kaieteur News – The recently renewed Liza 1 permit seeks to put in place protection for citizens of Guyana and its environment as oil operations occur offshore.
Crude has been pumping from the Liza 1 Field since 2019, but its operation has come under much criticism given the country’s environmental vulnerability due to limited insurance coverage. Again, the document is being criticized for not offering the type of protection that is needed in case of a serious oil spill in the Stabroek Block.
The EPA announced days ago that it accepted Financial Assurance from Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—instead of Full Coverage insurance. They announced that the Permit ensured that EEPGL is held liable for all costs associated with clean up, restoration and compensation for any pollution damage coming out of the project.
They said that EEPGL must have a combination of Insurance that “cover well control, clean up and third-party liability as well as “a Parent Company/Affiliate Guarantee Agreement which indemnifies and keeps indemnified the EPA and the Government of Guyana in the event that EEPGL and its Co-Venturers fail to meet their environmental obligations under the Permit.” However, “The financial assurance provided must be guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities that may arise from any breaches of this permit.”
Former Environmental Protection Agency (EPA) Chief Executive Officer (CEO) Dr. Vincent Adams told the Kaieteur News that all this new language means is that ExxonMobil will be capping its liabilities at the US$2 Billion guarantee which was proposed by the company to cover any oil spill.
He said that while as EPA boss, the language that he ensured was placed in the Liza 2 Permit, and which was copied in all others stipulate unlimited liability coverage comprising of insurance plus parent company guarantee to cover everything above the insurance and/or what EEPGL cannot cover, this new permit seems to provide room to cap the operator’s liabilities. “This is their first step in removing the current language that calls for unlimited/full liability coverage and replacing it with US$2 Billion,” Dr. Adams stated.
Where the permit speaks to credible and legitimate costs, the former environmental agency head said that, “It is mindboggling that any cost resulting from a spill cleanup would not be legitimate, reasonable and credible.”
“All this means, for example, is that if there is a spill like the BP spill in the Gulf that cost US$70 Billion, Exxon will only spend a maximum of $2 Billion for what they deem to be legitimate, reasonable and credible costs; and Guyana will be stuck with the balance.” Even the “ridiculous” $2 Billion cap is not guaranteed, Dr. Adams warned. He said, “Pay careful attention to such words as the financial assurance must be guided by estimate of “legitimate costs” and “reasonably credible costs”.
The bottom line is that they are dastardly violating the Permit which pellucidly directs them to obtain unlimited/full liability coverage and they now appear to be hustling to change the current language with this scam, because they know someone may take them to court and they will lose.” Dr. Adams described the new Liza 1 permit as “a hoax buttered up with fancy words to confuse and con our people.”
