Former EPA chief Dr. Vincent Adams has said many times that Full Liability Coverage (FLC) as enshrined in the permits, equals insurance plus a parent company guarantee to cover “any” costs above insurance. In mathematical parlance: Full Liability Coverage = Insurance + Parent Company Guarantee for all remaining costs. Parent Company Guarantee is simply a letter to be written on ExxonMobil’s letterhead stationery and signed by its CEO, Darren Woods.
That’s all it is. The letter must state words to the effect: “ExxonMobil assumes responsibility for all costs – in excess of the $600 million insurance policy – of clean up, restoration and compensation for any damages from any discharge of any contaminant”. This letter costs not a penny. No premiums have to be paid to insurance companies.
However, in the event of a major oil spill, the Guyanese people would expect the State’s Attorney-General to use that letter in a Court of Law to force ExxonMobil and its partners (CNOOC, Hess) to fulfill the terms of that letter. What is the benefit of this letter to the Guyanese people? They can go to sleep at night without having to worry that their State could go bankrupt in the event of a major oil spill. Following Guyana’s High Court ruling, AG Nandlall has issued a press release stating his office intends to appeal the ruling, stating it is his considered view that the “Environmental Permit imposes no obligation on the Permit Holder to provide an unlimited Parent Company Guarantee Agreement”. If Mr. Nandlall were to read the language on the permit issued for Liza1, he would notice that the permit does require unlimited parent company guarantee. The permit can be found here, https://www.oggn.org/wp-content/uploads/2022/07/EEPGL-Liza1-permit-renewed.pdf, section 14 deals with FLC.
Why would AG Nandlall want to appeal this ruling? Judge made an error, he says. The language in the permit seems clear – it does require parent company guarantee. The precedent from Exxon Valdez (1989) and BP’s Deepwater Horizon (2010) is that those companies, Exxon and BP, covered up to the last dollar of damages in billions of dollars. Why should it be any different if there were ever a major oil spill in Guyana? The real story here is that Exxon does not want to commit itself to full liability coverage. It wants Guyana to be on the hook for all liabilities in excess of the US$600 million policy that currently exists. The Macondo oil spill was estimated at US$145 billion. In the event of a major oil spill, Guyana would surely go bankrupt.
Whose responsibility is it to stop this from happening? Of course, it is the chief legal officer of the State, the Attorney-General’s. I am befuddled about what could be the real reason why AG Nandlall wants to appeal this ruling. I wish to advise the following: The State of Guyana has gotten a great ruling in its favour, thanks to High Court Judge, Sandil Kissoon. Take this ruling (Judge’s Declaration orders) in hand, Mr. Nandlall and summon CEO Darren Woods to a face-to-face meeting – and negotiate a resolution to this matter. Take Dr. Adams with you. Dr. Adams possesses the necessary expertise on Full Coverage Liabilities. He helped to draft the language that is currently written into the Permits (Permits to drill for oil).
Explain to CEO Darren Woods, it is just a Parent Company Guarantee that costs not a penny in premiums. All oil drilling is done on a Wing and a Prayer – hoping a spill never occurs. But if one were to occur, full compensation for damages is the responsibility of Exxon’s, not Guyana’s.
There is a great history lesson that this case can teach the Guyanese nation. All developing/emerging nations want a strong Judiciary. Chief Justice John Marshall (1801–1835) performed that role for the United States. Historians say John Marshall read the constitution – and from that he established the law. He added flesh and bones to the law.
He gave meaning to the law. Justice Sandil Kissoon, with this landmark ruling – laying down the law against an Oil Giant- is doing nothing less.
We are at that point in Guyana’s development of the law. Do not let an Oil Giant operate in Guyana without a Parent Company Guarantee. Make Guyana’s Judiciary stand strong, not weak. Make Guyana a proud nation. Appealing the ruling of Judge Sandil Kissoon is tantamount to surrendering to ExxonMobil – and putting Guyana at risk of bankruptcy. For a guarantee against potential bankruptcy of the State of Guyana, do not appeal this ruling. Go for a negotiated resolution of the matter. Show that a proud Guyanese nation can indeed sit down and negotiate with an Oil Giant – when its safety and security are on the line.
Sincerely,
Mike Persaud
On behalf of OGGN (www.oggn.org)
