A Guyanese court on Wednesday ruled that oil giant ExxonMobil’s offshore oil unit in Guyana is in breach of its insurance obligations, Reuters reports.
According to high court justice Sandil Kissoon, ExxonMobil “engaged in a disingenuous attempt” to dilute its obligations under its environmental permit for its Liza One project.
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The environmental permit for the Liza One unit requires ExxonMobil to take responsibility for a range of potential outcomes, including an umbrella guarantee that commits the company to cover all damage costs, beyond a $600m penalty should the project spill its oil.
Kissoon’s ruling stated that ExxonMobil must provide Guyana’s authorities with a liability agreement from an insurance company by 10 June. If they miss this deadline, Liza One’s environmental permit will be suspended. The agreement would protect the company from future damages stemming from incidents that cause environmental damage, such as oil spills.
Exxon “engaged in a course of action made permissible only by the omissions of a derelict, pliant, and submissive Environmental Protection Agency,” Kissoon wrote in the ruling via Reuters.
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“Error in his findings”
However, the country’s government has rejected the High Court’s decision. It said that the court breached its statutory duty by failing to enforce compliance by Esso Exploration and Production Guyana, adding that Kissoon “fell into error in his findings”. The government plans to appeal the ruling, it said in a statement, adding that it will seek orders to suspend the decision.
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By GlobalData“The ruling is what it is and we will comply at this time,” a spokesperson for the country’s Environmental Protection Agency (EPA) said. A spokesperson for Exxon said that the company is reviewing the court decision and will evaluate next steps.
An association of oil firms, led by ExxonMobil and including US company Hess and China’s CNOOC, currently produce the entirety of Guyana’s crude oil output, totalling approximately 380,000 barrels per day.
The Guyana EPA and the government’s energy ministry have so far approved five offshore oil and gas projects submitted by the oil exploration group. In October last year, the group made two new discoveries in the Stabroek block offshore Guyana at its Sailfin-1 and Yarrow-1 wells.
