— coverage provides for US$600 million per occurrence of a spill event, says EPA
THE Environmental Protection Agency (EPA) has described claims in a release issued by the Alliance For Change (AFC) on insurance and liability coverage in the eventuality of an oil spill as inaccurate.
The EPA, in a statement, said the claims made by the AFC parrots statements made by former EPA head, Dr Vincent Adams.
According to the EPA, it is guided first and foremost by the Environmental Protection Act and its suite of regulations and where the risk of oil spills is concerned, financial assurance is provided for in sections 30 and 31 of the Environmental Protection Act.
“It must be made clear that only Liza One permit issued in 2017 did not have a specific requirement for insurance coverage. Whilst the insurance requirement was introduced in Liza Two, it was only in the Payara, Yellowtail and the recently renewed Liza One permits were the requirement for insurance coverage and parent guarantee clearly defined,” the release said.
It noted that in the Yellowtail Permit, it is ensured that Esso Exploration and Production Guyana Limited (EEPGL) is held liable for all costs associated with clean up, restoration and compensation for any pollution damage which may occur as consequence of the project.
The EEPGL is also required to have financial assurance which includes a combination of insurance which must cover well control, and/or clean up and third-party liability on terms that are market standard for the type of coverage.
The EPA said it is in receipt of insurance policies from EEPGL for all permits issued, namely Liza One, Liza Two, Payara and is currently awaiting Yellowtail’s insurance policy.
“Each of these insurance policies has been executed and has coverage of a total of US$600 million per occurrence of a spill event. This per occurrence value covers third party liabilities, clean up and well control.
“None of the insurance policies provided has US$2.5 billion coverage for oil spill as is purported by the former EPA Head,” the release said
The EPA also noted that it was presented with a draft parent company/affiliate guarantee and is engaging EEPGL on its proposed total guarantee of US$2billion from an affiliate company in the event EEPGL and its co-venturers default.
The environment body added that it is ensuring that the circumstances under which the affiliate guarantee will be operationalised and the specific obligations covered are clear and acceptable.
“The EPA in the Yellowtail and renewed Liza 1 permits require that a Parent Company/Affiliate Guarantee Agreement is provided which indemnifies and keeps indemnified the EPA and the Government of Guyana in the event EEPGL and its co-venturers fail to meet their environmental obligations under the permit. Further, the EPA required that the financial assurance (US$2 billion) provided must be guided by an estimate of the sum of the reasonably credible costs, expenses, and liabilities that may arise from any breaches of this permit. Liabilities are considered to include costs associated with responding to an incident, clean-up and remediation and monitoring. It is also ensured that this value can be renegotiated to cover for increasing risks in the Stabroek block as a result of increasing projects,” the release said.
It noted that the requirement for insurance and parent guarantee and the terms and conditions for each of these were strengthened in the recent permits issued namely Payara, Yellowtail and renewed Liza One in late 2020, and 2022 respectively.
The EPA also said that it is not in possession of any documentation that indicated any commitment by EEPGL to the former head to provide US$2.5 billion in insurance coverage.
“If this is available, the EPA humbly asks that Vince Adams provide a copy to the EPA and/or the public. A draft Parent company/Affiliate Guarantee received in 2021 and offering guaranteed coverage of US2 billion is being negotiated by the EPA at this time,” the release concluded.