Minister of Natural Resources, Vickram Bharrat asserts that he has been working assiduously with the relevant government agencies to implement a governance framework for the oil sector as none was put in place by the former APNU+AFC administration.
One key area that was left with a series of loopholes has to do with the environmental regulation of oil operations. Specifically, Bharrat noted that the former government had no insurance in place for the Liza Phase One Permit. It was only updated last year. He said the same improvements were done to the Liza Phase Two Permit as well as for Payara.
During his contributions to last Thursday’s debate in the House on full liability coverage for oil spills, the Minister noted that Section 12 of the Liza Phase Two Permit adds specificity on the insurance type and amounts the Permit Holder is required to secure and builds on Article 20.2 of the 2016 Petroleum Agreement. “It also adds the right of the Environmental Protection Agency (EPA) to request and review the environmental liability insurance policy and makes the failure to secure insurance for coverage of environmental liabilities in alignment with the requirements of the EPA and the Bank of Guyana a breach of the Permit.”
He noted that the government went further to extend financial coverage beyond the insurance of the Permit Holder (ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited) to its parent, ExxonMobil Corporation. The Minister said that this serves as a fail-safe if the permit holder and co-venturers cannot pay or satisfy their environmental obligations.
With respect to the Yellowtail Environmental Permit, Bharrat argued that the government refined the insurance requirement by demanding a high credit rating of any insurance company Exxon uses. Minister Bharrat said, “The rating is a measure to ensure financial strength, and the ability to pay policy claims. Defining the appropriate credit rating is axiomatic to effective financial coverage for potential pollution damage.”
Guyana Standard understands that other improvements, such as the explicit reference to the cost of removal of wreckage and clean-up operations required as a result of an accident occurring in the course of permitted activities in the insurance coverage, were made.
