EEPGL close to finalising US$2B in “default guarantee” – Commercial Manager

…says assets capable of covering unlikely oil spill

With US$5 billion in assets and a further US$2 billion in affiliate company guarantees that Esso Exploration and Production Guyana Limited (EEPGL) is close to concluding negotiations for, the company is confident of its ability to cover any legitimate expenses in the event of a spill.
This was reinforced by EEPGL’s Vice President and Business Services Manager, Phillip Rietema, who facilitated a sit-down with the media on Wednesday to address issues surrounding financial assurance.
“EEPGL and the other co-venturers are responsible if a spill happens, and we’ll act as quickly as possible to address any environmental incident.  In our view, the fact that we’re a world-class operator makes a major spill very unlikely.  But if one were to occur, we have the financial and technical resources to address it,” Rietema explained.
“We’ve procured industry-standard insurance for the benefit of ExxonMobil Guyana and the co-venturers. So, if we have costs associated with an environmental incident, after we pay for those expenses, we could then go to our insurance companies and file a claim against our policy, and they would reimburse us for these expenses.”

According to Rietema, ExxonMobil Guyana would act immediately in the event of an oil spill, using the primary resources of both it and its co-venturers to mitigate whatever environmental damage caused and settle legitimate claims.
Filing an insurance claim for whatever Exxon spent on a hypothetical clean-up only would occur post-oil spill and only if the expenses have passed the insurance deductible.  There is also an affiliate company guarantee, which Rietema said is close to being concluded with the Environmental Protection Agency (EPA).
“We have insurance that is for our benefit. If we do not address all of the environmental obligations, then we have affiliate company guarantees, that’s $2 billion, that would be for the benefit of Guyana.
“So, if EEPGL, Hess, CNOOC, if we all default – very, very unlikely… then we’re also providing guarantees from other companies within our group, that would be for the benefit of Guyana.  It’s very close (to being concluded) – very, very soon. Final details are being worked out,” the Business Services Manager further explained.
It had previously been pointed out by the company that EEPGL, ExxonMobil’s local affiliate operator of the Stabroek Block, was established in 1998, and had, as of year-end 2020, approximately US$5 billion in assets.
These assets are considered a primary form of financial assurance and are separate from the assets of the other Stabroek Block co-venturers. In fact, Exxon noted that these other co-venturers also have substantial assets and share any liability for response activities.
The company had also noted that in Guyana, it adhered to an internationally-accepted, tiered response system used to determine the requirements of response personnel and equipment in the case of an oil spill.
This system, it had noted, is aligned with the principles of the International Convention on Oil Pollution Preparedness, Response and Cooperation (OPRC), the Caribbean Island Oil Pollution Preparedness Response and Cooperation and the National Oil Spill Response Plan of Guyana that was implemented in 2021. All of this combine to provide an efficient framework to build preparedness and response capabilities matching the oil spill risks from any of its operations. (G3)