ExxonMobil fears halt of operations at Liza Phase 1 but hopeful appeal to court ruling will save the day
Defending an appeal to the recent High Court ruling from Justice Sandil Kissoon, President of ExxonMobil Guyana, Alistair Routledge, on Friday expressed fears that a failure to secure a stay of the judge’s order could potentially result in a halt of operations at Liza Phase 1 in the Stabroek Block offshore Guyana.
In the ruling, Justice Kissoon ordered Guyana’s Environmental Protection Agency (EPA) to issue an Enforcement Notice directing the company’s local subsidiary to provide unlimited liability parent guarantee for its operations in the Stabroek Block within 30 days.
And as that timeline draws near, the company hopes the Appeal Court will grant its request for a stay of the order until the hearing and determination of the appeal.
Routledge clarified on Friday also that the appeal was not an objection to providing an unlimited liability parent guarantee for its operations but rather a pure rejection on the grounds that the ruling is in conflict with clauses of the Liza permit itself.
“The forms of financial assurance shall be guided by an estimate of the sum of reasonably credible cost expenses and liabilities so an estimate should be used,” Routledge said while reading directly from the permit.
“So, it’s very clear there should be a value estimated that is credible so that for the country I think it is most important that everyone feels there are sufficient insurance in place.
“To have uncapped insurance only has a value up to what is available from the affiliated companies providing that insurance,” he added.
According to Routledge, the eventualities of a possible suspension of operations will only affect Liza Phase 1 even as he once again registered the company’s disappointment in the ruling.
And a repeated assurance at the press conference was that the U.S oil giant will not change its commitment to doing “the right thing.”
The ExxonMobil Guyana President said the company is well aware that should it walk away from any commitment, to oil spills or otherwise, it runs the risk of losing future licenses.
And with a second appeal filed by the Guyana Government to the same ruling, ExxonMobil does not believe it was done to help the company but rather an expression of concern for what the ruling means for future investments and contractual obligations.
Routledge said there was no doubt that the right measures are in place to prevent, mitigate and if necessary, pay for a clean-up in the event of an oil spill.
He reminded that in the environmental permit, the oil major has an absolute obligation to prevent spills from occurring and if it does happen, to bear the cost.
And to support its prevention efforts, he highlighted the careful use of technology, design of wells, procedures, training and an overall culture of safety.
“We have put everything into preventing an instance from happening,” Routledge added.
Asked directly why the company is objecting to an added safeguard, he pointed to the series of response measures already in place. One of the most significant he said is the procurement of capping stacks – a piece of equipment that is placed over the blown-out well as a “cap.”
One of the caps will be in the country by 2024 but should a spill occur before then, although highly improbable, Routledge said the capping stack can be in place within five days.
But beyond that, well over $20 billion in financial resources are currently available to respond to a possible spill and it includes up to US$19 billion in financial assets from ExxonMobil’s local affiliates – Esso Exploration and Hess – another US$600 million in insurance as required by the permit and another US$2 billion in affiliate guarantees.
“A long line of defenses for a highly unlikely event… resources to respond are available,” he added.
