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Blocking chimneys won’t eliminate need for unlimited parent company guarantees on oil spills – Opposition
The country’s capping stack is now
Kaieteur News – In the case of oil production activities, the arrival of plugging systems in the country in response to blowouts does not mean that there is no need for unlimited guarantees from the parent company to ensure that the country does not bear the costs associated with such disasters.
This was highlighted by People’s National Congress/Reform Party (PNC/R) economist and oil and gas spokesperson Elson Low during the Opposition Leader’s weekly press conference on Friday.
When asked to comment, he said Kaieteur News It is always important to have safety equipment to respond to a spill, however, these tools alone cannot be relied upon to protect the country.
“It is of course always useful to have additional safety equipment if an oil spill occurs; however, there have been cases in the past where the safety equipment has not worked effectively,” Lowe explained.
He continued: “Oil spills are notoriously difficult to control quickly, and you saw that with the Deepwater Horizon spill, where the equipment that they were using to plug the well actually failed, and that equipment failure allowed the spill to continue.”
To this end, the Opposition made it clear that while the additional equipment was useful, it was not a substitute for unlimited parent company guarantees and adequate oil spill insurance.
“It (the capping device) is not a substitute for parent company guarantees and proper insurance so we need to keep pushing for that and we need to remember that these safety devices, while useful, cannot guarantee the entire country from an oil spill,” he said.
ExxonMobil on Monday launched construction of the country’s first capping stack, one of 11 ExxonMobil currently has worldwide and one of only two in Latin America.
A plug is a heavy metal device that is placed over a blowout well. It acts as a plug, thus preventing further flow of hydrocarbons.
Guyana currently has a $2 billion oil spill guarantee provided by ExxonMobil Guyana Limited (EMGL), the operator of the Stabroek block, and its partners Hess and CNOOC.
Court of Appeal Judge Rishi Persaud has ordered ExxonMobil Guyana to provide a $2 billion parent and/or subsidiary guarantee as a condition of a stay of execution of a lower court order. The order, initially issued by High Court Judge Sandil Kissoon, required an unlimited parent guarantee to be provided to the Environmental Protection Agency (EPA) by June 10, failing which the Liza Phase 1 project licence would be suspended.
After appealing the EPA and ExxonMobil ruling, the partners in the Stabroek block submitted a guarantee and indemnity agreement on June 9, 2023. The government has also applied to join the matter to fight the country’s comprehensive oil spill insurance.
ExxonMobil, the operator of the Stabroek Block, holds a 45% interest, Hess Guyana Exploration Ltd. holds a 30% interest, and CNOOC Guyana Petroleum Ltd. holds a 25% interest. Each joint venture company contributed to the $2 billion guarantee in accordance with its participating interest in the Stabroek Block. Jamestown Insurance Company Ltd. is the guarantor for Hess; while CNOOC Limited (a company incorporated in Hong Kong) and Exxon Equity Holdings Ltd. are the guarantors for CNOOC and ExxonMobil, respectively.
Currently, the three projects in the Stabroek Block produce more than 640,000 barrels per day. Notably, all three floating production storage and offloading vessels (FPSOs) are producing more than their original design capacity, which has raised safety concerns among stakeholders, especially since the country does not have an unlimited oil spill guarantee from the parent company.
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