Dear Editor,
The Environmental Protection Agency (EPA) has taken note of an article published in the media on December 20, 2024 under the headline, “EPA shamefully omitted sections of Exxon Permit to argue against unlimited parent company guarantee for oil spills – Dr Adams.”
The EPA has carefully reviewed the article, and hereby offers the following comments:
1. The EPA is cognizant that Dr Vincent Adams is a former political appointee as Head of the EPA during the administration of the A Partnership For National Unity + Alliance For Change (APNU + AFC) Government, and appears to have relevance in only one particular media entity.
2. Notably, Dr Adams has continued to use this avenue in his attempts to mislead the people of Guyana by suggesting that ExxonMobil had, in the past, agreed to an unlimited parent company guarantee; and further, that this provision was reversed by the present Administration, resulting in ExxonMobil now being reluctant to provide this coverage.
3. In this latest article, Dr Adams accused the EPA of deliberately not stating the entire clause of the section of the Permit for the “Liza Phase 2 Development Project – Stabroek Block, Offshore Guyana”, which is being referenced. In turn, the Kaieteur News, in quoting Dr. Adams, fails to mention that a screenshot of the entire section was included in the media release for Dr. Adams to review, if he so desired. The screenshot is again included.
4. For clarity, the full section reads: “The permit Holder must, as soon as reasonably practicable, provide from the Parent Company or Affiliate Companies of Permit Holder and its Co-Venturers (“Affiliates”) one or more legally binding agreements to the EPA, undertaking to provide adequate financial resources for the permit holder and its Co-Venturers to pay or satisfy their respective environmental obligations regarding the Stabroek Block if EEPGL or its Co-Venturers fail to do so.”
5. The question which therefore arises is on what basis does Dr. Adams ascribe false equivalency to the meaning of the words “adequate” and “unlimited”? Is it a legal interpretation? Or is it a literal interpretation? The Agency invites Dr. Adams to clarify.
6. The EPA maintains that Financial Assurance, as provided for in the Environmental Protection Act Cap 20:05, requires the Agency to set an amount in any form of financial assurance required of any Permit Holder.
7. The Agency then requested that an estimate of the reasonably credible cost for responding to and clean-up of worst-case oil spill be estimated in the case of financial assurance required for oil and gas operators to inform us of an amount to be required.
8. This means that an estimate had to be arrived at, as per the conditions of the law. In this regard, the EPA reviewed guidelines used by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) as well as authorities in the United Kingdom, USA and Canada.
9. International guidelines require conducting an exercise to arrive at an estimate of the reasonable credible cost of an oil spill. This would then be used as a guide on what the parent company guarantee would be, hence US$2 billion was arrived at for the Stabroek Block.
10. The US$2 billion is the floor. With increasing developments, that estimate can increase. So, it is not the ceiling, it is the floor. If the cost is more, there is a clause that says the EPA and the guarantor can negotiate fulfilling that increase, while the polluter stands the full cost.
11. The EPA requires ExxonMobil and its partners – Hess and CNOOC – to provide authorities with an annual declaration of their liquidity. This ensures that, at all times, the Agency is aware that the companies can cover their liabilities.
12. In keeping with the Environmental Protection Act, the EPA remains committed to ensuring that Guyana’s interests and the environment are protected, and will continue to do so at all times.
Sincerely,
Environmental
Protection Agency
(EPA)
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