Calls for ExxonMobil to shut down over flaring unnecessarily extreme – GOGEC

Recent calls for the Government to shut down operations of United States oil giant ExxonMobil over its latest flaring episode on the Liza Destiny vessel offshore have been described by President of the Guyana Oil and Gas Energy Chamber (GOGEC) Manniram Prashad as “unnecessarily extreme”.
During a press conference on Wednesday hosted by the Alliance For Change (AFC), Executive Member and former Head of the Environmental Protection Agency (EPA), Dr Vincent Adams, said the Liza permit explicitly states that the EPA has the authority to terminate operations at any time.

As such, Dr Adams, who was sent on leave in August 2020, posited that if he were still heading the EPA, “…that is what I would’ve done, because we have been bending over for Exxon.”
However, in a statement on Thursday, Prashad expressed deep concern over the strong assertions by former EPA Executive Director to shut down operations until the issues with the flash gas compressor are solved.
“GOGEC wishes to point out that this call by the former EPA head is an unwarranted and unnecessarily extreme in the circumstance. While any excessive flaring is unacceptable, GOGEC is cognisant that with regards to the specific matter, the Government of Guyana and ExxonMobil and its partners are currently addressing the matter,” the missive detailed.
Prashad posited in the missive that, as a new oil producing country, it is imperative that Guyana appreciates and understands that the global oil industry is one that is heavily capital intensive, and by its very nature, is an extremely risky business.

“Not only is the nature of the oil industry business one that is highly risky, but this is compounded by high regulatory costs in other countries whose industry is heavily regulated and of course – risks of oil spill which are also very costly to oil companies. ExxonMobil, unfortunately, has not been spared of the manifestations of such risks over the years in other parts of the world, and has borne the costs that comes with it,” he noted.

Beyond control
The GOGEC President argued that these are factors that are beyond the control of ExxonMobil, coupled with the demand and supply dynamics that impact oil price volatility as well.
Prashad went on to remind that the US oil major commenced oil exploration activities in Guyana since 1999, after securing a contract with the government of the day, and it was not until more than a decade later that Exxon struck oil in commercial quantities in 2015.
“…if it wasn’t for ExxonMobil’s persistence and its risk appetite, Guyana would not have been an oil producing country today,” Prashad contended.
Meanwhile, GOGEC further outlined in its missive that owing to the now burgeoning oil and gas sector, Guyana’s average Foreign Direct Investment (FDI) annually pre–oil was US$260 million.

However, post oil production which started in 2019, FDIs now amount to US$1.7 billion – reflecting an increase of US$1.4 billion or 536 per cent from what Guyana’s normal average level of FDIs was before becoming an oil producing country.
In Thursday’s missive, Prashad reiterated the fact that ExxonMobil is an important partner in Guyana’s long-term development.
As such, he said “…it is unacceptable to allow any unnecessary calls for extreme consequences towards the company. GOGEC, therefore, wishes to urge all stakeholders to seek to obtain win-win situations in these matters, rather than a strong-arm approach. This may not be healthy for the country’s and ExxonMobil’s mutual interest.”
Further, GOGEC cautioned that such calls for extreme actions can also stave off foreign investors and dampen investors’ confidence altogether – at a time when investors’ confidence in Guyana is at an all-time high.
“We therefore strongly reject such calls by the former EPA Head,” the Chamber stated.
Last month ExxonMobil said it had to increased its flaring of gas due to more technical issues on the gas compressor of the Liza Destiny Floating, Production, Storage and Offloading (FPSO) vessel.

Technical issue
In a statement on January 29, the oil major said it is experiencing a technical issue with a seal on Liza Destiny’s gas compressor.
“This unfortunate incident resulted in us having to temporarily increase our flare above pilot levels in order to maintain safe operations,” the missive stated.
President of ExxonMobil Guyana, Alistair Routledge, had noted that efforts are underway to fix this issue as soon as possible.
Only less than a year ago, the oil giant came under heavy fire for its flaring activities, which have negative effects on the environment, and has had environmentalists up in arms over the harmful exercise.
Meanwhile, the PPP/C Government has made its position pellucid on routine flaring, and, in the Payara Development Licence, prohibited the activity and included fines as well as provisions for the oil company to repay Guyana the cost of the gas wasted.
With regards to the Liza Destiny flaring, Vice President Bharrat Jagdeo, at a press conference last week, said the current levels are unacceptable.
ExxonMobil’s current level of flaring offshore Guyana has been described by Vice President (VP) Bharrat Jagdeo as unacceptable, but he noted that the EPA’s hands are tied due to the Environmental Impact Assessment (EIA) that was approved. (G8)