Exxon subsidiary agrees to ‘parent guarantee’ for Uaru project
…Jagdeo says company has one month to formalise this assurance
ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), was given an Environmental Permit to execute its fifth project, Uaru, in the Stabroek Block offshore Guyana and the company has agreed to put a parent guarantee in place.
Guyana’s Environmental Protection Agency (EPA) granted this permit on Thursday.
This parent guarantee essentially refers to insurance provided by a parent company (in this case, ExxonMobil) that is expected to cover any additional expenses not covered by the subsidiary (which, in this case, is EEPGL).
“I had a report from the EPA that the parent guarantee is practically negotiated and now Exxon, as the operator, has to get its shareholders approval.
“Hopefully that will be done shortly but the wording and everything else has been settled,” Jagdeo told reporters at a party press conference on Thursday.
Importantly, the Vice President said that approval should be done within one month and then the parent guarantee will be in place.
Many stakeholders have called for a parent guarantee to be instituted amid ongoing exploration and production in the Stabroek Block so that the potentially devastating impact of adverse events offshore, such as an oil spill, can be adequately dealt with.
And indeed, the EPA said one key condition for Uaru’s approval was the “conclusion of negotiations on this Parent /Affiliate Company Guarantee”.
It expects that this guarantee will be executed “shortly” with both the guarantor and the beneficiary signing an agreement.
EPA, in its release announcing that the permit was issued, said the Permit Holder is expected to provide several forms of financial assurance to cover all legitimate environmental liabilities.
