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EPA permit approved with assurance, not insurance …fine on flaring up by G$1,000

EPA permit approved with assurance, not insurance …fine on flaring up by G$1,000


Kaieteur News- The Environmental Protection Agency (EPA) has renewed the Environmental Permit allowing Esso Exploration and Production Guyana Limited to continue to produce oil and gas from the Liza I field in the Stabroek Block, saying that the company was in compliance with the first iteration of the Environmental Permit for the Liza Phase 1 Project.

Alistair Routeldge

This is according to the EPA in its public missive announcing the renewal and lauded some changes made. The changes however, appear to fall short of the demands of many in the international community and also regional and local experts who have been calling for the renewal of the permit to be put on hold since it could be used as a bargaining chip in order to press for a better deal for Guyana where the country could see a bigger revenue take.

One such change alluded to, is the EPA acceptance of a Financial Assurance from Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—instead of Full Coverage insurance. The EPA in making the announcement said, “…among the notable conditions, the Permit ensures that EEPGL is held liable for all costs associated with clean up, restoration and compensation for any pollution damage which may occur as a consequence of the project.” As such, under the new permit, EEPGL is also required to “have Financial Assurance which includes a combination of Insurance which must “cover well control, and/or clean up and third-party liability on terms that are market standard for the type of coverage.
This in addition to “a Parent Company/Affiliate Guarantee Agreement which indemnifies and keeps indemnified the EPA and the Government of Guyana in the event EEPGL and its Co-Venturers fail to meet their environmental obligations under the Permit.”

Kemraj Parsram, Head of Guyana’s Environmental Protection Agency

It was noted by the EPA that “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; Liabilities are considered to include costs associated with responding to an incident, clean-up and remediation and monitoring.”

As it relates to the sore issue of flaring, it was noted that the fine was increased. A perusal of the specifics as presented by the EPA outlines that this fine has since been raised by US$5.
As such, the company would now pay a paltry US$50 per every ton of carbon dioxide emitted through flaring, up from the US$45 that was being charged.
Meanwhile as it relates to the other pollutants such as the sewage and produced water dumped overboard into the Atlantic Ocean, the EPA said this will now be monitored.
According to the EPA, the Permit requires the submission of the effects of these discharges every six months and that further, “EEPGL is required to submit safety case information, including a Risk Assessment prior to the drilling and development of wells.”
It should be noted that EEPGL President Alistair Routledge in March last had insisted, “we have the financial capacity to meet our responsibilities for an adverse event and we are committed to paying all legitimate costs in the unlikely event of an oil spill.”

He had made the commitment in a public statement in reaction to the increasing outcry domestically and internationally for Guyana to be safeguarded through a binding full coverage insurance from the parent Company ExxonMobil Corp. According to Routledge at the time, the company’s assets up to the end of 2020, was almost US$5B, which is a primary form of financial assurance. He had said citizens should note that this is separate from the assets of the other Stabroek Block co-venturers who also have substantial assets and share any liability for response activities.

In addition, Routledge said EEPGL is working with the EPA and its co-venturers, Hess Corporation and CNOOC Group, to put in place a combined US$2B of affiliate company guarantees. “As stated by ExxonMobil Chairman and CEO Darren Woods at the recent International Energy Conference, ExxonMobil is committed to Guyana for the long term. ExxonMobil Guyana has invested billions of dollars in multiple oil and gas projects here. We are dedicated to avoiding any spill, but should one occur, we are prepared to mitigate and resolve it as quickly and comprehensively as possible,” said Routledge.