ExxonMobil gets environment permit for fifth oil project

-parent company guarantee new feature

Just over a year after it applied, ExxonMobil Guyana has gotten a fiveyear environmental permit for the Uaru project – what would be the fifth oil extraction operation in Guyana’s waters – and a parent company insurance guarantee is to feature for the first time.

In a statement yesterday, the Environmental Protection Agency (EPA) said it had approved the Uaru Petroleum Development Project and granted the permit to ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) to undertake the construction and operation of petroleum production facilities, within the Stabroek Block, Offshore Guyana. The EPA said that the approval of the Environmental Impact Assessment and granting of the Environmental Permit were done in keeping with the Environmental Protection Act Cap 20:05.

“The approval of the Project comes after the EPA considered public inputs during all statutory periods for public consultations and review. The EPA also took into consideration the technical review and recommendations from a team of Independent International Experts, and the Environmental Assessment Board (EAB). The EAB reviewed and declared the revised EIA acceptable and provided recommendations to the

EPA for its consideration for inclusion in the Environmental Permit”, the statement said.

Environmentalists have accused the EPA of granting approvals to ExxonMobil’s subsidiary without taking full account of the cumulative dangers posed by the growing number of oil platforms. Two are functioning at the moment and another is to begin operations soon. Two more will follow in the coming years and more are planned.

The EPA noted that Uaru Project is the fifth petroleum development project to have been permitted in the Stabroek Block.

“The Permit granted comprehensively addressed all environmental and social safeguards that are reasonably necessary to protect human health and the environment, including implied conditions as provided for in section 13 of the Environmental Protection Act”, the agency said.

The EPA listed key provisions in the Permit

Flaring - Like its predecessors, the Uaru Permit strictly prohibits routine flaring and venting, and specifies that flaring is only permissible during commissioning, start-up and special circumstances. The Permit also maintains payments in cases where flaring is conducted beyond permitted durations.

Produced water

The Permit requires the Permit Holder to ensure that the oil content specification of produced water to be released does not exceed 42 mg/L on a daily basis or 29 mg/L on a monthly average. Further, the Permit requires the Permit Holder to examine and develop a plan for a phased reduction of oil content specification of

produced water to levels lower than the above standards.

Liabilities

Among the conditions in the Permit which cater for liability are:

● The Permit Holder shall bear all costs of the restoration, rehabilitation and compensation required as a result of damage incurred due to an oil spill or other emergency resulting from the execution of the Project. The costs referred to shall be independently assessed and evaluated by a third-party determined by the Agency.

● The Permit Holder is liable for all costs related to clean up, restoration and compensation for any damage caused by any discharge of any contaminant, including the cost of all investigations into pollution incidents or discharge of contaminants, conducted at the instance of Agency.

● The Permit Holder shall compensate any person who suffers any loss or damage as a result of any contravention of section 19(1), in accordance with section 19(3)(e) of the Environmental Protection Act.

● The Permit Holder, his Servants and/or Agents shall be liable for any material or serious environmental harm caused by their pollution of the environment in accordance with section 39 (2) and (4) of the Environ-mental Protection Act, Cap. 20:05, Laws of Guyana.

● The Permit Holder, his Servants and/or Agents shall be jointly and severally liable for any negligence or willful misconduct which causes harm to the environment, biodiversity, protected species and natural habitat.

● The Permit Holder, his Servants and/or Agents shall be liable jointly and/or severally for any gross negligence or willful misconduct to the marine environment, biodiversity, protected species and natural habitat with respect to any release or discharge, spill, contaminant fluids, oil or lubricants any facilities permitted under this project.

● The Permit Holder, his Servants and/or Agents shall be liable jointly and/or severally for environmental damage due to pollution from its activities within Guyana, its territorial waters, contiguous zones, continental margins, continental shelf, and Exclusive Economic Zone, inclusive of damage to the marine environment, biodiversity, protected species and natural habitat with respect to any release or discharge, spill, or contamination which is attributable to the Permit Holder and his agents or contractors. This is in accordance with Section 49 (1) of the Maritime Zones Act 2010 and is subject to any other existing or forthcoming laws, regulations and standards governing the protection of the marine environment.

Financial assurance

The Permit addresses Financial Assurance as follows:

The Permit Holder shall provide to the State, within a reasonable time of signing of this Permit, a combination of the following forms of Financial Assurance to cover all its legitimate environmental liabilities under this Permit. These shall include:

● Insurance in accordance with Condition 14.4, and shall cover Well control, and/or clean up and thirdparty liability on terms and in adequate amounts of coverage that are market standard for the type of Insurance;

● The Permit Holder shall, each year, provide a written declaration of EEPGL’s and its Co-Venturers’ financial capability to fulfill all liabilities (including remediation, compensation, loss or damage etc.), as required by the Environmental Protection Act Cap 20:05 and this Permit. The required declaration shall be accompanied by EEPGL’s and each CoVenturers’ statement of financial position for the preceding year indicating each Companies’ assets, liabilities, equity, and such further financial information, as may be necessary.

● The Permit Holder shall provide one or more guarantee agreement(s) in which the Parent Company or Affiliate Companies of Permit Holder and its CoVenturers (“Affiliates”) shall undertake to promptly and within thirty (30) days, upon notice of default, provide adequate financial resources for the Permit Holder and its CoVenturers to pay or satisfy their respective environmental obligations regarding the Stabroek Block, if the Permit Holder and/or its CoVenturers fail to do so, and to so indemnify and keep indemnified the Agency and the Government of Guyana, against all such environmental obligations regarding the Stabroek Block.

The EPA said that one key condition for approval was the conclusion of negotiations on the Parent /Affiliate Company Guarantee referenced above. This is expected to be executed shortly with the signature of the guarantor and beneficiary. A two-year-old audit report by the UK firm IHS Markit had found flagrant breaches as it related to the insurance obligations of the partners in the Stabroek Block.

In seeking to ensure EEPGL meets its obligations to prevent and mitigate environmental harm, the release yesterday said that the Permit imposes comprehensive requirements for monitoring and management of any impacts affecting biological, physical, and socio-economic resources within the Area of Influence of the project. The Permit also requires EEPGL to submit safety case information, including a risk assessment prior to drilling and development of wells.

The full text of the Uaru Permit is available for download on the EPA’s website at www.epaguyana.org.