Govt negotiating US$2B insurance policy with ExxonMobil – AG Nandlall

…says Opposition’s motion was “misconceived, flawed”

The Guyana Government is currently negotiating an insurance coverage of up to US$2 billion with ExxonMobil in the case of any oil spill or disaster event offshore, where the United States oil giant and its co-venturers are producing oil and conducting exploration activities.
This is according to Attorney General and Legal Affairs Minister Anil Nandlall SC, during his weekly programme – Issues in the News.
“We are currently negotiating with the parent company for a US$2 billion coverage. So that is the framework that we currently have as per the licences,” he disclosed.
This revelation comes on the heels of the National Assembly last week dismissing a motion tabled by the A Partnership for National Unity/Alliance for Change (APNU/AFC) Opposition, proposing “full unlimited coverage for oil spills and other disasters related to the petroleum sector”.
Speaking about the motion, which was tabled by Opposition Member of Parliament David Patterson, the Attorney General pointed out that the concept of unlimited insurance can only be a theoretical construct, and does not exist in the real world.

Unpragmatic
While the motion was eventually thrown out by a majority vote from the Government’s side against it, Nandlall noted that such a proposal is unpragmatic.
“Practicality and pragmatism do not support this concept of an unlimited insurance. The concept is repulsive to reality… No insurance company would issue a policy that has no limit. What is the ceiling? How much are they going to pay? An insurance policy is grounded in the law of contract; contract, by its very nature, must be precise. It must have terms and conditions that are precise, so that people can know what they are agreeing to. Who will agree to a contract that has limitless liability? Which insurance company will agree to a contract that has no ceiling on the limit?” he argued.

Misconceived and flawed
According to the Attorney General, even if such a concept existed, it still would not have worked, since insurance policies are based on a value attached to what is being insured.
“It doesn’t make sense, but this guy puts in a motion and then argues on it… So, the entire concept of his motion, the entire basis of his motion, was misconceived and flawed,” he contended.
The Legal Affairs Minister further called out the Opposition for pushing the People’s Progressive Party/Civic (PPP/C) Government on this issue, when they failed to include insurance conditions on the Liza Phase 1 Permit – something the current administration has since fixed.

“From 2017 to 2019, the Liza 1 Permit did not have any insurance policy. They issued Liza 1 Permit and they did not put any insurance at all. But he comes to our Government now and he wants limitless insurance, he wants unlimited insurance… So, the Liza 1 that they issued had no insurance whatsoever, we amended Liza 1 and we put insurance. We also put insurance on Liza 2, and we put insurance also in Yellowtail,” Nandlall posited.
These insurance clauses each include a policy of US$600 million per event. That means that if an event is to occur today, and another tomorrow, then each event will have a US$600 million coverage.
Moreover, during the negotiations of the policy for the Yellowtail Permit, there was an agreement that was put forward to limit the liability to certain areas of damage. However, he disclosed that this was rejected by the PPP/C Administration.
Employing the causation principle in the law of negligence and the principle of polluter pays, the Minister explained, the insurance policy applied would run wherever the damage flows.
According to AG Nandlall, this may not be perfect insurance scheme or policy, but it is far better than what the Coalition did, which is nothing.
In fact, he noted that all the APNU/AFC regime did was create the framework for the type of insurance that can be applied in the oil contract.
“What Mr Patterson doesn’t understand is that the contract…has a clause in it that speaks to insurance, and regulates the issues of insurance between the parties. And the four corners of that clause in that contract is what [is] governing the insurance in relation to that sector, at least the operators who have signed that contract. You can’t come outside the four corners of that clause, and they signed that contract in 2016,” the Attorney General outlined. (G8)