Exxon to lodge oil spill money
An appeals court judge has saved the day for ExxonMobil and its consortium partners producing nearly 400,000 barrels of oil daily offshore Guyana by ordering the suspension of a previous lower court order to halt operations in one of its oil fields for failing to provide unlimited financial guarantees in the event of an oil spill.
But Justice Rishi Persaud recently, nevertheless, ordered the American supermajor in partnership with Hess Corporation and CNOOC of China to lodge a US$2 billion deposit with the Environmental Protection Agency (EPA) within 10 days in the event there is an environmental disaster at its operations in the prolific Stabroek Block. If the Exxon-led consortium fails to cough up the money, the appeals court will allow the recent decision of the high court to suspend operations at the Liza One oil field, the first of two the grouping is operating.
A group of concerned local environmental and rights activists had asked the court to determine whether the consortium is correct in simply declaring that it will be fully responsible for any offshore oil spill rather than being compelled to provide an unlimited parent company guarantee for its Guyana subsidiary, Esso Exploration and Production Guyana Limited in the event of an environmental mishap. The litigants argue that a spill at any of the deep water wells would devastate Guyana and its Caribbean neighbors to the north, destroying tourism and the region’s blue economy for decades.
The lower court had also severely criticized the EPA for failing to enforce contract clauses linked to disasters as well as liability insurance and a parent company guarantee or unlimited liability insurance. Exxon has persistently contended that a spill is highly unlikely and it would do its part if there is such a disaster.
