Appellate Court Justice Rishi Persaud on Thursday temporarily stayed the High Court’s order requiring Exxon Mobil (XOM.N)Â and partners in offshore oil production to provide an unlimited guarantee to cover potential oil spills.
The stay lifts a cloud over oil production at the nation’s first offshore oil platform. Exxon had said that if the stay was not granted it could halt output at the facility, costing the partners on the project $350 million per month in lost revenue.
The judge said the group, which includes Hess Corp (HES.N) and China’s CNOOC (0883.HK), must provide a $2 billion guarantee in 10 days, or else his stay would be lifted.
Exxon recently agreed to provide the $2 billion in affiliate guarantees for the offshore operation that goes beyond the original environmental liability coverage, it told the court.
Justice Rishi Persaud said during the hearing that a “damning picture” of revenue loss and “devastating consequences in the event of a permit suspension” had led him to grant the stay.
A lower court had found in a case brought by residents that the consortium was in breach of insurance obligations for its first offshore oil project.
Exxon and the nation’s government – which receives royalties from the project and a share of profits –Â appealed that ruling, arguing there was sufficient protection.
The company welcomed the decision, which a spokesperson said was “in the interest of all parties involved”.
“It is a matter of national significance, particularly for thousands of Guyanese workers and hundreds of local businesses who rely on the oil and gas industry,” the spokesperson said.
An attorney for the nation’s Environmental Protection Agency (EPA), which opposed the lower court’s finding that Exxon breached its permit requirement, welcomed the stay.
The agency will seek a full hearing before the appeals court to have the initial ruling dismissed, he said.
“The concept of an unlimited guarantee is one that is oppressive and, in my humble view, unlawful,” Sanjeev Datadin told Reuters.
