Oil production operations at Liza 1 in the Stabroek Block offshore Guyana are at risk of being shut down if the Guyana Appeal Court does not grant ExxonMobil’s stay application on the recent High Court order for unlimited insurance coverage to be in place within 30 days.
On May 3, High Court judge, Justice Sandil Kissoon ordered the Environmental Protection Agency to issue an Enforcement Notice to ExxonMobil’s local affiliate, Esso Exploration and Production (Guyana) Limited (EEPGL), to provide an unlimited Parent Company Guarantee Agreement within 30 days and failure to do so would result in the suspension of the Liza 1 permit.
ExxonMobil has since appealed the decision and requested a stay on the court order.
According to ExxonMobil Guyana President, Alistair Routledge, if this stay is not granted then the entire Liza 1 operations would be in jeopardy.
“We filed an application for that order to be stayed because we believe if we’re unable to secure, as ordered, those unlimited guarantees, then obviously the permit is suspended per that order and then we would have to stop production on the Liza Phase 1 facility, which then has significant financial implications for all of the investors but also for the country in the sense of revenues that would be lost.”
He explained that this would amount to some US$350 million a month in revenue losses.
In the meanwhile, Routledge noted that the Stabroek Block co-venturers – Exxon, Hess Corp and CNOOC – have all reached out to their respective parent companies about providing an unlimited guarantee.
“What we are working on is seeing whether we can secure such a garuntee from our affiliated…or parent companies and HESS and CNOOC are also asking those questions of (their) parent companies. We don’t know whether we will be able to secure those. But that is something we are pursuing…,”
The ExxonMobil Guyana President further clarified that the oil major is not pushing back against any safeguards for the country.
In fact, he reiterated the company’s obligation and commitment towards preventing any oil spills, while noting that the company already has about $20B in financial resources set aside to respond to such events.
