Motion – Liability Insurance Coverage for Spills
Whereas Oil production offshore Guyana is expected to increase rapidly from its current rate of 120,000 barrels per day (bopd) to close to 1 million bopd, with the number of FPSOs increasing over 10 times by 2026;
And Whereas worldwide offshore oil production operations show a high likelihood of an oil spill occurring offshore Guyana, and that such likelihood of a spill increases exponentially with the rapid increase in offshore production activities;
And Whereas Guyana’s oil spill response plan is grossly inadequate for such an emergency, cleanup and restoration;
And Whereas the emergency response and cleanup of the British Petroleum Macondo oil spill in the Gulf of Mexico have so far cost more than $70 Billion USD;
And Whereas the Government of Peru has recently reported that a major oil company operating in Guyana under reported a 12,000 barrels oil spill at its operations in Peru, and then refused to honor its obligation to clean it up, thus causing grave harm to Peru’s economy and environment;
And Whereas a major oil spill offshore Guyana would result in the environmental devastation of Guyana and its neighbouring countries, obliteration of the areas fishing industry, aquatic vegetation, and economic bankruptcy, including possible lawsuits from neighbouring countries;
And Whereas the Liza 1 Permit signed by the current PPPC appointed EPA Head and issued in June 2017, designates as Permit Holder – Esso Exploration and Production Guyana Limited (EEPGL), a subsidiary Limited Liability Corporation (LLC) of parent companies, ExxonMobil, Hess and CNOOC;
And Whereas as this newly formed LLC, EEPGL does not have any financial assets to cover any oil spill and environmental damage liability;
And Whereas the 2017 Liza 1 Permit did not contain any provision for full liability coverage, but instead held EEPGL liable for any spill and environmental upset, even though EEPGL does not have any assets to cover any such liabilities;
And Whereas following the Coalition’s change in EPA’s Leadership, the Liza 2 Permit was corrected to ensure unlimited liability for all spills by including a provision requiring EEPGL’s purchase of the maximum available private insurance offered in the market, with all of the remaining liabilities to be covered by EEPGL’s parent companies – Exxon, Hess and CNOOC;
And Whereas EEPGL agreed to the unlimited liability coverage commitment in the Liza 2 Permit and urgent purchase of the maximum available private insurance prior to signing the Permit;
And Whereas EEPGL requested a concession for EPA to sign the Permit in order to maintain the confidence of its investors, conditioned upon giving EEPGL time to negotiate an Agreement amongst its parent companies on how those liabilities would be shared amongst the companies;
And Whereas EPA granted EEPGL its reasonable request for time to negotiate an Agreement amongst its parent companies to ensure unlimited liability coverage, since the Liza 2 production was not expected to commence until four years hence;
And Whereas EEPGL timely obtained the maximum $2.5 Billion private insurance available on the market prior to EPA signing and issuing the Liza 2 Permit in April 2019;
And Whereas EPA’s and EEPGL’s Attorneys held frequent meetings from May 2019 until the PPPC took office, to discuss several drafts of the Agreement amongst the parent companies, and were close to finalizing the Agreement at the time that the PPPC took office;
And Whereas upon taking office, the PPPC not only immediately terminated the services of the then EPA Head responsible for forcing the acquisition of unlimited liability coverage, but also terminated the services of the EPA Attorney handling finalization of the Agreement;
And Whereas immediately following the termination of the then EPA Head and EPA Attorney handling the finalization of the parent companies Agreement to have unlimited liability coverage, the PPPC also terminated the discussions relating to the finalization of the Agreement, which was conditioned on the Liza 2 Permit;
And Whereas the country is left without any liability coverage for a major oil spill, except for the $2.5B USD obtained under the previous administration;
And Whereas there has been an overwhelming public outcry from the likely affected populations of all walks of life in Guyana, the Caribbean region, and other international stakeholders for a guarantee of full liability coverage for the cleanup of any oil spill offshore Guyana;
And Whereas the Vice President is now publicly stating that the EPA is currently negotiating with EEPGL to have in place $2B USD worth of private insurance, thus begging the question as to whether the VP is aware of the $2.5B USD coverage acquired under the Coalition, or whether the PPPC has cancelled that $2.5B USD coverage, leaving Guyana with absolutely no coverage for an oil spill damage that could cost over $70 Billion, as was the case with the BP Macondo spill in the Gulf of Mexico.
Be it Resolved that the Government recants its decision to cancel the process already established in 2017 for obtaining unlimited liability coverage by EEPGL’s parent companies – a process that was agreed upon by Exxon and made a condition of the Liza 2 Permit, and was close to being finalized when the PPPC took office in 2020;
And Be it further Resolved that the Government returns to the already well-established process put in place by the previous administration which made a condition of the Liza 2 Permit for
guaranteed coverage by EEPGL’s parent companies, agreed upon by EEPGL, and was nearing completion when the PPPC took office;
And Be it further Resolved that this parliament calls on the Government of Guyana, to include full unlimited liability coverage for oil spills and other disasters related to petroleum production as a condition for granting approval for the proposed Yellowtail development and all other future petroleum development.
And Be it further Resolved that the Government of Guyana, conducts an independent analysis on the possible ill effects of an oil spill, and present this report to the Parliamentary Committee of Natural Resources to be used as a reference for all other future oil development submissions.
And Be it further Resolved that, if necessary, the Opposition stands ready, able, and willing to assist the Government in getting back on track the expeditious acquisition of unlimited liability coverage for an oil spill.
Submitted by:
David Patterson M.P.
Seconded by:
Mrs. Tabitha Sarabo-Halley, MP
