New oil spill legislation to mandate compensation for affected individuals, entities

…set to be tabled at next Parliament sitting

Vice President Dr. Bharrat Jagdeo announced on Thursday that the much-anticipated new oil spill legislation, which will mandate compensation to individuals and entities for economic and other losses incurred as a consequence of any oil spills, is expected to be tabled before the National Assembly at the next Parliament session.

This new law is designed to address a glaring gap in the current regulatory framework, which currently holds only oil producers liable and covers their insurance for spill cleanups, leaving affected individuals and businesses to pursue civil suits for compensation. Speaking on Thursday at his weekly press conference at Freedom House Jagdeo emphasised the government’s commitment to advancing this crucial piece of legislation.
“That legislation is in draft, we’re discussing it now and we will go to parliament,” he confirmed.
The proposed legislation marks a pivotal shift in how oil spill liabilities will be managed in Guyana. It seeks to extend liability beyond oil companies to include crude oil transporters, who will also be held accountable for all costs associated with spills.
The new law will ensure that all oil and gas companies, as well as crude oil transporters, will be financially responsible for compensation claims related to lost economic activities and other damages caused by oil spills.
«We missed it in the last session of Parliament, but in the new session of parliament we intend to pass legislation to make all oil and gas companies, and then to extend it to everyone else like the transporters of our crude, liable for all costs associated with any spill including costs for compensation to people for loss to economic activities,” Jagdeo said.
Jagdeo had spoken on government’s plan to legislate better oil spill coverage earlier this year as Guyana observed difficulties faced by the Trinidad and Tobago Government in dealing with the catastrophic oil spill that ensued after a mystery vessel ran aground and released approximately 50,000 barrels of oil.
This incident underscored the urgent need for comprehensive legislation covering all potential parties responsible for oil spills. The oil spill in Tobago left severe damage to the island’s beach, with the government declaring the situation a national emergency, and estimating that the damage could reach as much as US$30 million.
Legislation
This legislation will not only affect oil spills relating to the production of crude offshore but also the transportation of petroleum and related products in and around Guyana.
In August, Prime Minister Brigadier (Retd) Mark Phillips told this publication that that the country’s oil spill legislation will deal with oil spills beyond offshore Guyana – where ExxonMobil and its coventurers are producing oil.
The prime minister urged participants of the workshop to develop a deeper understanding of oil spill contingency planning and to refine the skills required to effectively implement the national oil spill contingency plan.
Underscoring the importance of preparedness in mitigating the risks associated with the burgeoning oil and gas industry in Guyana, Prime Minister Phillip stated that the repercussions of an oil spill could be far-reaching and long-lasting, impacting everything from tourism and fisheries to the overall health of the natural environment.
Guyana has taken several proactive measures to strengthen its oil spill preparedness and response capabilities. Among these efforts is the passage of the Petroleum Activities Bill 2023, which replaces the outdated Petroleum Exploration and Production Act of 1986. This new legislation ensures responsible and modern management of the petroleum industry.
Additionally, the government has significantly strengthened oil permits, and environmental regulations to minimise liabilities and manage environmental and economic impacts. Recently, a model Production Sharing Agreement (PSA) was developed to sign with new investors.