-President Ali reflects on essential role of EPA in Guyana’s rapid growth

AMIDST Guyana’s unprecedented transformation, President Dr Irfaan Ali has pointed out that the Environmental Protection Agency (EPA) is now playing a more advanced role in the nation’s development.
The President made those remarks during a recent engagement with stakeholders from the EPA.
President Ali said: “In this phase of our national development, the EPA is entrusted with tremendous responsibility from an oversight perspective, to a regulatory perspective and, importantly, from a monitoring perspective”.
He also said that the EPA has assumed a “very diversified, significant role in national development.”
“That is where the EPA is positioned,” Dr Ali firmly stated.

Notably, Guyana has made significant strides in strengthening its oil permits as well as environmental laws and regulations, drawing from the experiences of other countries and international standards and guidelines, according to Kemraj Parsram, Head of the EPA.
In his recent appearance on the Energy Perspectives Podcast, Parsram underscored the nation’s swift progress in this industry, placing strong emphasis on the crucial need to glean insights from international exemplars.
He provided a detailed account of the significant advancements made in the energy sector’s permitting process, ensuring that Guyana will be absolved of any liability in the event of an oil spill.
“Our first oil and gas permit was in 2017. At that time, we were newbies in the oil and gas sector. And the EPA never had to deal with oil and gas. We were dealing with forestry and mining. But we managed to quickly come up with permit conditions guided by what existed at that time…like the IFC [International Finance Corporation] Standards and Guidelines…and came up with a permit.
“But that was the baby of the permits. We are now four or five years into it and we have indeed grown leaps and bounds. And the key message here is that we are learning and we are learning fast in order to make those changes to improve our permit,” he explained.
He said the nation’s oil permits have undergone a rigorous strengthening process in order to properly manage the environmental and economic impacts.
The strategy of Guyana involves the clarification of permissible aspects of flaring.

“ There was zero routine flaring from day one. But then we realised that there are situations that would require some amount of flaring. We just can’t say no. Because for safety reasons, you have an emergency; you may have to flare. So, we strengthened those guidelines, we strengthened the language and as well attached a fee or tax in a case where they are flaring in excess of what is allowed…,” the EPA Director explained.
In the event of flaring exceeding designated timeframes, the company is obligated to compensate for the emission of Carbon Dioxide equivalent (CO2e) at a rate of US$50 per tonne of CO2e.
Parsram also discussed financial assurance which he described as a “big thing”. He said the Environmental Protection Act is very clear about “full liability” in the event there is an oil spill. “In the words of the Act, it is strict liability…It means if you’re a permit holder you are fully responsible and [have] full liability for any pollution that you cause. And that doesn’t have to be proven.”
But how does this transfer to securitisation of liability?

He explained: “What we have done over the past two, three years…we looked at what our Act says about financial assurance and strengthened those requirements. Looking at how it exists in other jurisdictions. Other jurisdictions indeed have similar laws. You have full liability; you have strict liability. But securitisation is a different story…”
According to him, an estimate of the realistic and credible costs of an oil spill must be conducted in accordance with NOPSEMA criteria. “And so, we have done that. We have an initial value and we have put in place a parent company guarantee. And that is only in the event if the permit holder defaults. One of the key things we also asked for is an annual declaration of their liquidity or their financial statements or the balance sheet at the end of the year to show us that you [the company] have enough money to cover your liabilities,” he said.

“And it’s US$2 billion initially. It will not decrease; it’s the floor. And with increasing risks and increasing developments, that estimate can go up.”
The required US$2 billion oil spill guarantee has already been handed over to the EPA by Stabroek Block operator ExxonMobil and its co-venturers, CNOOC and Hess.