Insurance policies

EPA clashes with former Head Over insurance policies for Exxon operations

The assurances given by the Environmental Protection Agency (EPA) that it is currently engaging Esso Exploration and Production Guyana Limited (EEPGL) on a total guarantee proposal of US$2 billion to supplement the US$600 million insurance policies Americans for the Liza 1, Liza 2 and Payara permits found no favor with former EPA chief Dr. Vincent Adams, who warned that if ExxonMobil was allowed to backtrack on signing a unlimited guarantee agreement, Guyana could be forced to pay billions in the event of an oil spill.

In a statement, the EPA explained that it receives insurance policies from EEPGL for all permits issued, namely Liza1, Liza 2 and Payara. However, he is waiting for the Yellowtail insurance policy. “Each of these insurance policies has been executed and covers a total of US$600 million per spill event. This value per occurrence covers liabilities to third parties, cleanup and well control,” the agency explained.

While refuting claims that the insurance policies provided have US$2.5 billion oil spill coverage, the EPA has confirmed that it is committing EEPGL to its proposal for a full coverage of 2 billion US dollars of an affiliate in the event of default by EEPGL and its joint venturers.

According to the EPA, it does its best to ensure that the affiliate guarantee is “clear” and “acceptable”.

“The EPA has required that the financial assurance ($2 billion) provided be guided by an estimate of the sum of reasonably credible costs, expenses, and liabilities that may arise from any violation of this permit. Liabilities are considered to include costs associated with incident response, cleanup, remediation and monitoring,” he explained.

But Dr Adams, in a letter to the editor on Saturday, called the $600 million insurance policy “pathetic.”

While explaining a long-standing position that EEPGL had accepted “unlimited cover/full liability”, Dr Adams pointed to Section 12 of the Liza 2 permit which states that the permit holder must have insurance. He recalled that Article 12.6 stipulates that the permit holder will be strictly responsible for any discharge or discharge of pollution, contaminants in any quantity.

“What is undoubtedly stated above and signed by Mr. Henson of Exxon are the unambiguous insurance requirements by EEPGL, together with a written guarantee agreement from parent companies Exxon, CNOOC and Hess to cover all costs beyond the insurance value payable. for damages “in any amount… if EEPGL fails to do so,” Dr. Adams said.

He stated that “regardless of amount” meant “unlimited amount” and therefore insurance plus parent company guarantee would equal unlimited/full coverage.

Dr Adams said the EPA must now explain to the people of Guyana why it is allowing Exxon to roll back the signing of an unlimited warranty agreement already written into the license and replace it with a meager total coverage of 2.6 billion USD ($2 billion parent company guarantee). + $600 million in insurance).

Arguing for full coverage, he pointed out that the cost of the Macondo spill in the Gulf of Mexico exceeded US$70 billion.

Former EPA chief Dr. Vincent Adams

“That means the EPA agrees that if a Macondo-sized spill occurs, Guyana would be left with the bag to cover the remaining $68 billion, or about 34 times our entire national budget, not to mention of long-lasting devastation and even bankruptcies of economies across the Caribbean.Even a spill as small as a tenth the size of the Macondo would cost three times Exxon’s total coverage of $2.6 billion including the EPA is so giddy, and more than three times Guyana’s total national budget,” Dr. Adams explained.

He added: “It is therefore a most heinous act not only against the people of Guyana, but also against our neighbors in the Caribbean and South America, that the EPA is now looking to Exxon to reduce liability protection. unlimited/full (in the Permit as noted above), up to their proposed cap of just US$2.6 billion.

But ExxonMobil Guyana spokeswoman Janelle Persaud, in a statement last Friday, maintained that Rod Henson, the former chairman of ExxonMobil Guyana, had never signed a document committing to “liability coverage unlimited including insurance plus a parent company guarantee,” as Dr. Adams claimed.

“After making these claims repeatedly, it seems entirely appropriate that Dr. Adams produce the ‘documents’ he claims were signed,” Persaud said, challenging Dr. Adams to provide the evidence.

ExxonMobil Guyana, she said, maintains comprehensive insurance coverage that meets international industry standards for all of its oil operations in Guyana.

“As previously stated, our first priority for all operations is to prevent adverse events by using the best technologies, processes and people in our operations. In the unlikely situation that an event occurs, we have put in place personnel , response procedures and equipment aligned with the principles of the International Convention on Oil Pollution Preparedness, Response and Cooperation (OPRC), Oil Pollution Preparedness and Cooperation Caribbean Islands Hydrocarbons (OPRC) and Guyana’s National Oil Spill Response Plan,” Persaud assured.