Following the recent ruling by the High Court that the Environmental Protection Agency (EPA) must enforce the liability clause in the Environmental Permit granted to United States oil major, ExxonMobil Guyana for its offshore oil operations in the Stabroek Block, Vice President Dr. Bharrat Jagdeo has argued that Guyana needs to ensure that local bodies are acting in a professional manner and not focused on economic nationalism.
High Court judge, Justice Sandil Kissoon, on Wednesday, ruled that the EPA has abdicated its exclusive statutory responsibilities and ordered that it issue ExxonMobil’s local affiliate, Esso Exploration and Production (Guyana) Limited (EEPGL), with an Enforcement Notice to provide, within 30 days, an unlimited Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee, together with Environmental liability insurance, as is customary in the international petroleum industry.
But Jagdeo pointed out during a press conference on Thursday that while Government wants to ensure that there are adequate resources to cover the liabilities of any mishap, the country cannot be capricious in its dealings, particularly at the level of regulatory agencies.
“We have to pursue diligently, professionally that outcome, which is to get as a country an insurance coverage that will meet all the circumstances, should we have an adverse event offshore. [But] it’s important that institutions act in that manner, in a professional manner because we are now attracting large volumes of capital from around the world. Eyes of the world are focused on Guyana and what could’ve passed in the past as economic nationalism would not hold water in the new dispensation,” he posited.
According to the Vice President, the quality and professionalism of local institutions are important tenets to efforts of setting up Guyana as an attractive destination for more capital investments to transform the country and its people.
“So, our courts have to make predictable decisions – I’m not saying in favour of the government or against the government but it has to be well reasoned…”
“We’re not going to take [the court ruling] in a manner that’s hostile but we need to make sure that our institutions don’t act based on economic nationalism or the peripheral noise out there. We’re playing the big leagues now. We’re not a backwater country where you can do whatever you want and get away with it. And for that reason alone, I think the decision should be appealed,” Jagdeo contended.
Attorney General and Legal Affairs Minister Anil Nandlall, S.C., has already indicated the government’s intention, as a major stakeholder, to move in this direction. He instated that the Environmental Permit imposes no obligation on the Permit Holder to provide an unlimited Parent Company Guarantee Agreement and/or Affiliate Company Guarantee Agreement hence the Judge erred in his findings.
The AG, too, pointed out that this ruling can have profound ramifications and grave economic as well as other impacts on the public interest and national development.
In September 2022, the President of the Transparency Institute of Guyana Inc (TIGI), Fredericks Collins, and Guyanese citizen Godfrey Whyte had moved to the court to get the EPA to implement the liability clause in the permit issued to ExxonMobil (Guyana) for its operations. They wanted the court to ensure EEPGL takes full financial accountability in the case of harm, loss, and damage to the environment from a well blowout, oil spill, or other failures in the Stabroek Block.
On the issue of whether the EPA acted in breach of its statutory duty and unreasonably permitted Esso to carry out petroleum production operations in the absence of compliance with the terms of the permit, Justice Kissoon ruled that the EPA has committed an illegality, acted unlawfully, ultra vires, unreasonably, in defiance of logic, irrationally, and without any jurisdiction. Hence, the court order that the agency issues the Enforcement Notice to EEPGL on or before May 9 to provide an unlimited Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee, and failure to do so would result in the suspension of its Environmental Permit.
But Jagdeo maintained on Thursday that EPA has to be able to professionally justify its work without any interference or any rush to complete its work within a set timeline that can pressure the agency.
In fact, he pointed out the EPA has been engaging the oil major over the past year on the parent guarantee. Those negotiations, according to the Vice President, were only concluded last week to the tune of US$2 billion in liability coverage in compliance with EEPGL’s financial assurance obligations under the Environmental Permit and the Environmental Protection Act.
“I’ve said about a month ago that it was close to finishing, and last week I said that the agreement has practically been settled for US$2 billion of the parent guarantee… But the EPA has been working… nobody wants this more. I would’ve loved for Exxon to give us a US$500 billion coverage but for them to offer us a guarantee, it has to be supported by money on their balance sheets too.”
“I think a lot of things were not understood clearly and sometimes it gets a bit complex. Here, this decision needs to be appealed by the EPA because it makes the EPA looks like it’s not doing its work. The EPA is staffed with professionals and it’s been doing its work, protecting the interest of the country… My own thing is the judiciary can interpret maybe several issues… But I think it’s threading on mirky waters when you start directing a regulatory agency as to how to do its own job and give them a timeframe to get it done in because you can’t supplant yourself and know what the challenges they face are…,” VP Jagdeo posited.
