All Guyanese, our Caribbean neighbours, and Venezuela, must now be worried sick by the Honourable VP Jagdeo’s announcing that slashing the parent company guarantee from full coverage, down to a piddling $2 Billion USD, “remains a priority”. This in-your-face sellout and betrayal of our people, not only throws out the existing legal full liability coverage which the government has so cowardly failed to enforce; but also, cold-bloodedly exposes Guyana and our neighbours to potential economic ruins, in the event of a major oil spill.
Full Liability Coverage as enshrined in the permits, equals insurance plus a parent company guarantee to cover “any” costs above insurance. In mathematical parlance:
Full Liability Coverage = Insur-ance + Parent Company Guarantee for all remaining costs
This is similar to having health or car insurance, where insurance covers a certain percentage of the bill and you have to foot the remainder. Likewise, in the case of an oil spill such as the Macondo in the Gulf of Mexico, a $2B guarantee and the $600M USD insurance, only add up to US$2.6B which is less than 2% of Macondo’s US$145B cost. The remaining US$142.4B have to come from somewhere; thus, the absolute necessity for a full hook in of EEPGL’s parent company Exxon to cover this remainder, since unaffordable for EEPGL in such a scenario. Without this full hook in, there must be an explanation as to who will cover costs over that US$2.6B. Though far less than enough, the VP answers this, by putting forth that EEPGL’s US$8B in assets could be seized. However, as sanctified in the contract, all of EEPGL’s assets will be turned over to us “free of charge”, since we paid for these in cost oil. This means the seizing of our own assets is senseless. It also begs the question, why did EEPGL get incorporated in The Bahamas and not Guyana, and would this in itself, shackle Guyana from accessing any of their little money, anyway? Therefore, the VP must identify which assets not owned by the Government, add up to this US$8B.
EEPGL is only a subsidiary of parent company Exxon, incorporated in The Bahamas, with very little assets, and set up as a Limited Liability Company (LLC) to operate Guyana’s oil projects. LLCs are mainly formed to protect the deep pocket big boys like Exxon from liabilities. Resultingly, Exxon has no legal connection to the Contract or permits, and so, free of all liabilities; hence, why it was necessary to hook them in, with a full Parent Company Guarantee, which legally secures that they have to pay for all damage not covered by insurance. An eye opener is where Shell Oil is currently fighting an oil spill lawsuit by Nigerians; and you guessed right! Shell’s defence is that it is not responsible for its subsidiary under which the spill occurred.
The VP himself, admitted on the Glenn Lall show that “yes, full liability coverage is in all of the permits”; and in his August 19, 2022 press conference, exclaims “it is by law and by the permit they have to do this. Full coverage: that is an obligation…that’s what the oil companies understand is that they are liable for any oil spill according to the law and the EPA for full coverage, and the government’s ultimate aim is to have a guarantee that covers all, and any such liability.” The VP therefore owes it to the people to explain his sudden capitulation to Exxon. Also, since he validates the existing legal obligations for that full parent company guarantee, it means that this US$2B is nothing but a gimmick to camouflage the government’s bowing down to Mr Routledge’s demands to cut the existing guarantee to US$2B; when, instead, all the government needs to do, is carry out its solemn responsibility to its people, by enforcing the existing law calling for full parent company guarantee, without fear or favour. It never misses an opportunity to go after our own poor people, heartlessly tearing down their little homes, and stalls used to eke out a living.
Dumbfoundedly though, is that the VP seems to know more about what is in EPA’s permits than the EPA itself, charged with enforcing the permits. In its March 23, 2023 letter to the Editor, titled “The EPA is always learning and improving its understanding of the oil and gas sector”, EPA brought to light its embarrassing lack of understanding of what is in its own permits, including what is meant by full liability coverage, and what is the difference between “insurance” and “parent company guarantee”. Hence, to their pleading for “learning and improving its understanding of the oil and gas sector”, I strongly recommend that they contact the Red Thread women’s group to urgently garner that missing “learning”, including the digesting of Red Thread’s outstanding video on “full liability coverage” at https://www.youtube.com/watch?y=3gbEpZbTdhM. These courageously heroic women of Red Thread must be highly commended for not only their knowledge about Guyana’s environmental issues, but even more-so, for their personal sacrifices and commitment to this most important cause of fighting for the nation’s protection with a full parent company guarantee.
Furthermore, to cover-up the VP’s barefaced untruthfulness that I signed the very poor Liza 1 permit which preceded me by 15 months, the EPA peddled that the Liza 2 permit (which I signed to fix Liza 1), is “almost a replica of the Liza 1 Permit”. How could anyone with any intellect and humanity, celebrate that to have full liability coverage in the Liza 2 permit, is the same as having no coverage at all, in the Liza 1 permit, meaning that full coverage means nothing to them? Is this a reflection of EPA’s leadership continued show of unfeelingness and disdain for the people of Guyana who they are required to be serving? Is it to distract from their subservience to Exxon and negligence in not enforcing the requirement for full parent company guarantee? Or, is it a case of ineptitude, similar to the EPA Head equating emissions from the gas plant with that of a motor car?
Even with the littlest of commonsense, one could see that Exxon has no intention of covering a big spill. Their farcical tune is that they will never walk away from this responsibility. If that is the case, why do they defy signing the guarantee, especially since it does not cost a single dime? Beyond that, is this a company anyone should trust, considering their international reputation including the many reported lost and pending lawsuits brought by governments in Africa and the USA, alleging fraudulent reporting of data? Not to mention the shake-up of their own Board, due to concerns about their environmental stewardship. Furthermore, right in our back yard, the Peru government was forced to seize the passports of Executives of Repsol, following a relatively small spill, and had to sue Repsol for US$4.5B, while now putting laws in place for future protection. As old people seh, “why wait till night time to use candlelight to see what you can see in daylight”.
Further aggravating the dire consequences of an oil spill, are a litany of critical shortcomings that are irresponsibly countenanced by the government: (1) EEPGL is producing oil way above the “safe operating limits” mandated by the Environmental Impact Assessment (EIA) – the ‘bible’ of high risk operations which is held sacred, with unbearable penalties including shutdowns, when violated, but for which the EPA has proven to loathe; (2) the government’s shunning of the World Banks Plan for a 36-member EPA Petroleum Unit of highly skilled professionals to provide 24/7 on-site presence on the FPSOs and drill ships; (3) the oil spill response plan is grossly inadequate as verified by the Auditor General; and of course (4) no parent company guarantee.
By its signing of the permits, Exxon willingly accepted that there shall be no start-up or issuance of any future permits without signing the Parent Guarantee. Despite that, the Government seems to be loving Exxon more than Exxon loves Exxon, when it retreated from what Exxon had willingly accepted. Lo and behold, the Government went ahead and approved the Payara and Yellowtail permits, and renewed the Liza 1 permit without the signed guarantee called for, in all of those permits, thereby rendering illegal, the ongoing operations at Liza 1 and 2. Most conspicuously telling, however, was the termination of the services of the EPA Attorney in charge of finalizing the guarantee and who was steadfastly prosecuting the case filed against EEPGL for six small spills, when EEPGL refused to pay the tiny total fine of $500 USD. Does anyone in their right mind believe that Exxon would willingly pay billions of dollars for a large spill, when they did not even want to pay $500 for small ones?
Finally, my positions on Guyana’s oil development are no secret. My open criticism of the APNU+AFC Government and the oil contract, even as an employee, are well known and hailed at the time, by my PPP/C friends; and as I recall, I was the first to openly criticize the oil contract in a Stabroek News cover story of February 4, 2018. I openly support maximum oil production; however, it must be done in full abidance with the country’s rule of law; and in a responsible, safe, and environmentally sound manner. To add, I was most fortunate to have had almost all of my academic and professional career grounded in the most powerful capitalist country in the world, including the privilege of operating at the highest levels of the US Government, developing and executing policies to keep America competitive.
My most fundamental takeaway from what maintains America’s economic paramountcy, is the doctrine that there can be no development and economic competitiveness without reverence for the rule of law with checks and balances, unparalleled competency, and accountability. Regardless of how much money comes from oil, Guyana will never attain its rightful place as the richest country, unless it strives to attain those values; thence, it is discouraging that Guyana is seemingly doing the complete opposite by tearing down the necessary institutional pillars of such realizations. I would say unequivocally, that Exxon would not even dream about doing in the US, what they are getting away with, in Guyana; and Exxon knows it. They must not be allowed to leave big, fat and happy after their 20 to 30-year sojourn, while we are left with the dreaded oil curse suffered by other countries such as Nigeria and Venezuela. All we ask is for Exxon to show us respect, give us our fair share, and abide by the same rules and values no less than what they have to abide with in their home country, USA.
Yours faithfully,
Dr Vincent Adams
