Appeal Court grants stay of order for Esso Exploration to provide unlimited insurance

By Kurt Campbell

[email protected]

Appeal Court Judge, Rishi Persaud, on Thursday issued a stay against the order handed down by High Court Judge, Sandil Kissoon which required ExxonMobil and its subsidiary Esso Exploration and Production Guyana Limited (EEPGL) to provide unlimited liability guarantee for its operations in the Stabroek Block.

Following a preliminary assessment of the appeal filed by Esso Exploration, Justice Persaud cast aside emotivity and impassioned statements and asserted his conviction that there are real prospects of success in the appeal.

The order is stayed pending the hearing and determination of the substantial appeal, one that Justice Persaud said is urgent and of national importance as it seeks the provision of insurance in the event of an oil spill.

The granting of the stay was accompanied by an Order instructing that Esso Exploration lodges, within 10 days, a US$2 billion guarantee, failing which the stay will be dismissed.

ExxonMobil had expressed fears recently 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.

Currently, at least 120,000 barrels of oil are being produced at Liza Phase 1 daily.

ExxonMobil said too 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.

It was confirmed last week that the Environmental Protection Agency (EPA) had issued the Enforcement Notice directing Esso Exploration to provide unlimited liability parent guarantee for its operations in the Stabroek Block.

But even though the notice was issued in keeping with the 30 days stipulation, the EPA and Esso Exploration are both seeking to have the decision overturned.

Attorney Sanjeev Datadin is representing the EPA while attorney Edward Luckhoo, SC, is representing Esso Exploration.

Senior Counsel Seenauth Jairam is representing the respondents.

In arguing for the stay, Datadin said the matter amounted to a simple issue of interpretation, noting that both the environmental permit and the Act make reference to a fixed sum and as such, the ruling was in conflict by imposing unlimited insurance on ExxonMobil, its parents and affiliates.

He also rejected the court’s instruction that the permit should be cancelled if the order is not complied with, noting that there are already established procedures for non-compliance.

Datadin was for the most part supported in his arguments by Luckoo who went further to demonstrate the merit in the appeal and prospects of success.

And in so doing, Luckhoo maintained that the ruling offered a flawed interpretation of the permit and the law.

Jairam questioned the refusal to comply, noting that the unlimited parent insurance guarantee does not cost a penny but is only in place to show that the operators can, if called upon, to clean up and restore the environment to its pristine form after any incidents.

He called the appeal an attempt to deprive the successful litigant of the fruits of the judgment.