Demerara High Court Judge Sandil Kissoon has ruled in favour of the Environmental Protection Agency (EPA) enforcing the liability clause in the Environmental Permit granted to ExxonMobil (Guyana) for its offshore oil operations in the Stabroek Block.
Consequently, by an Order of Mandamus, EPA was directed to issue ExxonMobil’s local affiliate Esso Exploration and Production (Guyana) Limited (EEPGL) with an Enforcement Notice on or before May 9, for the company to provide, within 30 days, 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. Failing to comply would result in the suspension of the permit dated May 31, 2022, the Judge.
According to the Judge, the guarantees are to indemnify and keep indemnified Guyana and the EPA against all environmental obligations of Esso and its co-venturers within the Stabroek Block.
In September 2022, President of the Transparency Institute of Guyana Inc (TIGI) Fredericks Collins and another 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.
Referring to Esso’s agreement in the permit to provide insurance and an unlimited parent company indemnity to cover all environmental loss and damage that might result from a well blowout, oil spill or other failures in the Stabroek Block, the litigants went to court to ensure that Esso takes full financial accountability in the case of harm, loss, and damage to the environment.
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 held, that the EPA has committed an illegality, acted unlawfully, ultra vires, unreasonably, in defiance of logic, irrationally and without any jurisdiction.
The Judge said, “The [the EPA] failed to take any meaningful step or any step whatsoever to assess what was provided to it by Esso, the permit holder, purportedly as environmental liability insurance when it was not in fact in keeping with Condition 14:05 of the license.”
The High Court found that Esso was engaged in a “disingenuous attempt” which was calculated to deceive when it sought to dilute its liabilities and settled obligations stipulated and expressed Condition 14 of the permit while simultaneously optimizing production in the Stabroek Block.
“The insurance obtained by the EEPGL from its Affiliate Company, AON UK Ltd, both for the Liza Phase 1 and Phase 2 Projects does not satisfy the stipulation and obligation set out at Condition 14:5 of the Environmental Permit or even what is considered environmental liability insurance according to international standards of the petroleum industry,” the court further found.
Despite Esso, through its public pronouncements, communicated its intention to increase production levels in its petroleum production facilities, Justice Kissoon pointed out that EPA has failed to suspend and/or cancel the renewed permit, notwithstanding the potential catastrophic consequences to the environment, citizens and the State.
He, therefore, declared that Condition 14 of the permit, imposes on Esso “unlimited and uncapped liability for all costs associated with clean up, restoration and compensation for all damages caused by any discharge of any contaminant arising from its exploration, development, and petroleum production activities within the Stabroek Block offshore Guyana.”
Collins had contended that he cannot drive his car without insurance, and as such, it is incomprehensible that the EPA would allow Esso to operate without insurance.
An oil spill, he submitted, would be devasting not only to Guyana but the wider Caribbean as people depend on the ocean for their livelihoods. EPA and Esso, the respondents were ordered by the High Court Judge to pay Whyte and Collins $1.5M in costs. Whyte and Collins were represented by Senior Counsel Seenath Jairam and Attorneys-at-Law Melinda Janki and Abiola Wong-Inniss, the EPA by Attorneys-at-Law Francis Carryl, Shareefah Parks and Naiomi Alsopp and Esso by Edward Luckhoo, SC, Andrew Pollard, SC and Eleanor Luckhoo.
There are several court cases are challenging various aspects of ExxonMobil’s operations in Guyana.