Dear Editor,
While looking ahead to a likely appeal to the Caribbean Court of Justice, Guyanese and Caribbean citizens must be worried sick about the Appeal Court’s devastating overturn of Justice Sandil Kissoon’s May 3, 2023 sage landmark Decision requiring Stabroek Block operator, ExxonMobil (Exxon) Guyana Limited (EMGL) to provide a Parent Company Guarantee (PCG) from its parent company Exxon and affiliates CNOOC and HESS to cover all costs related to an oil spill.
As the Environmental Protection Agency (EPA) Head who created the PCG policy as the only necessary means to protect Guyana’s interest, with all due respect to the Court, I hands down disagree with its overturning of Kissoon’s profoundly thorough understanding of the context and well thought out Decision heralding the nostalgic feeling of national independence until now when ironically, the nation is about to celebrate its 60th anniversary of independence. Founding fathers Forbes Burnham and Cheddi Jagan must be turning in their graves witnessing the surrendering of Guyana’s sovereignty to new colonial masters such as corporate giant Exxon.
Unbelievably, although Exxon unconscionably corrals 86% of Guyana’s God given oil patrimony, the Court still chose to exonerate this filthy rich oil giant from all liabilities. EMGL, and not Exxon, is the sole contractor party to the Production Sharing Agreement (PSA) and all permits; and so, owns all of the liabilities despite not having assets to cover an oil spill.
Consequently, in the event of a spill, EMGL declares bankruptcy and Exxon goes scot-free, leaving Guyana holding the bag of financial bankruptcy and environmental catastrophe – unquestionably the trickery behind Exxon creating EMGL to insulate itself from liability; hence, the necessity for originating the PCG to save Guyana.
Exxon would never get away with such a scheme in its home country of the USA; but, as Judge Kissoon wisely puts it “EMGL is engaged in a course of action made permissible only by the omissions of a derelict, pliant and submissive EPA…putting this nation and its people in grave potential danger of calamitous disaster.”
Unfortunately, it appears that the Court accepted the nonsensical ghost defence arguments that the word “unlimited” is not in the permits; and that the guarantee should be capped with an estimate. The following EPA permit clauses in litigation are presented below for readers to judge for yourselves:
Clause 14:1 “The Permit Holder (EMGL) is liable for all costs associated with” an oil spill. Note the specificity of all costs (definition of “unlimited”) which means not capped for example at the phantom $2 Billion estimate (accepted by the Court).
Clause 14:10 “EMGL must provide from the Parent Company or CoVenturers (CNOOC and HESS) one or more legally binding agreements in which they undertake to provide adequate financial resources to pay their respective environmental obligations if EMGL “fail to do so”. Note the specificity of “if EMGL fail to do so” – dictating that parent Exxon must provide financial assurances/guarantee for all costs which EMGL cannot pay (fail to do so). Again, the definition of “unlimited”.
In summary, clause 14.1 mandates that EMGL as the permit holder is responsible for all costs. However, if EMGL has inadequate resources to cover all costs “fail to do so”, then 14.10 orders that deep pocket parent Exxon and CoVenturers are liable for all costs over what EMGL can cover. It is therefore unfathomable how such “unambiguous language” (Judge Kissoon’s words) could mean anything but an “unlimited guarantee”, since all means no limit. Yes, the term “unlimited” is not mentioned in the permit, but that is ghost argument if the words mentioned mean the same as “unlimited”.
Confusingly, the Court also found that “while Exxon remains liable for pollution related damages, that liability does not automatically require unlimited financial assurance”, completely ignoring the key operative words “all costs” at Clause 14.10 which could only mean “liability for all pollution related damages”. It begs the question, why were key words “all costs” so visibly omitted from this most consequential finding?
Further, instead of “unlimited guarantee”, the ruling required an estimate of the damage as Financial Assurance, hinting that the Court may have been terribly misled that such an estimate is possible or ever done. Whosoever could do such an estimate has to be a fortune teller and should immediately purchase a lottery ticket. Nonetheless, just to humor such an ludicrous thought, the only possible estimating method would be of an analogous type using a similar situation such as the Macondo oil spill which occurred in our backyard, gushing 5 million barrels oil for 87 days costing British Petroleum $US145 – none of which was, or could have been estimated! thereby leading to the million dollar question that was not addressed by the Court as to who will pay the cost of a Macondo type spill over and above Exxon’s farcical US $2B Assurance? It must be noted that this $2B ploy was Exxon’s first attempt in 2019 with insurance papers in hand to counter the EPA’s demand for the PCG, but it was instantly rejected.
Another frivolous defence argument was that there was no specific PCG, when in fact, there can be no more of a substantively bona fide PCG than the legal language in the EPA Permits shown earlier. The only required side Agreement was to be amongst Exxon, CNOOC and HESS referenced in clause 14.10 earlier as the “binding agreement” to show how the three entities will share “pay their respective environmental obligations” which had to be approved by the EPA before start of operation. If the Govt testified that such an Agreement never existed, then they admitted to violating the permits by approving startups without that Agreement. The Court should have hoisted them by their own petard.
Sadly, the whole crux of the matter flies in the face of Guyana’s sovereignty at this time of the nation’s momentous 60th independence anniversary celebration, when Exxon is being enabled by authorities to evade its moral and financial obligation to bear all costs of spill damages occurring from operations earning it $Trillions, while cold bloodedly exposing to financial and environmental ruins, the poverty-stricken country that generously furnishes its wealth.
Worse yet, besides dumping billions of barrels of hot, toxic, radioactive and oil laced produced water into our clean ocean, destroying its ecology and millions of fish eggs and fish life, and flaring of billions of cubic feet of toxic produced gas into our pristine air, causing health, acid rain, and climate change problems, Exxon is green-lighted to recklessly produce above the legal safe limits enshrined in the Environmental Impact Assessment, thus enhancing the chances of a spill without any liability coverage by virtue of this ruling.
With Guyana at its tender age of policy and law making for this critical oil sector, consequential decisions such as this ruling must be informed by the numerous bad lessons learned from other countries. A case in point is the litigation in the British Courts involving Nigerians suing Shell Oil Co. for costs covering oil spills in Nigeria; but, because of the absence of a PCG, Shell’s defence was that the spills occurred under their subsidiary company as their operator, making Shell not liable. Surprise! Surprise!
Also, Repsol which operates in Guyana, was responsible for a small 12,000 barrels oil spill in Peru; and absent tight liability laws, the Government was forced to seize the passports of Repsol’s Executives and sued the company for US $Billions for cleanup and other liabilities, in addition to urgently establishing new laws to protect Peru from recurrences of this kind.
Lastly, it must not go unnoticed that Exxon had willingly agreed to, signed, and honored the PCG language first enshrined in the yellowtail exploration well permit in 2019 and repeated in all of the subsequent permits thereafter; but, only became an issue when the PPPC took office and sided with Exxon to negate it, resulting in the lawsuit by the two patriotic citizens that has brought us to this point.
Yours truly,
Dr. Vincent Adams
