Exxon oil spill controversy heats up, Guyana Opposition calls for adequate safeguards

Guyana map with oil discoveries and lines as of September 2020. ExxonMobile
Guyana map with oil discoveries and lines as of September 2020.

Guyana’s government has granted approval for American supermajor ExxonMobil to develop a fourth offshore oil and gas field, but civil society and opposition groups are railing against authorities for doing so allegedly without adequate funding to clean up in the event of oil spills.

The groups want close to $3 billion in a special fund to manage any oil spill mainly in the Stabroek Block where Exxon has found nearly two dozen wells with sweet light crude. Exon says it has already set aside $2 billion in the “unlikely event” of an offshore disaster.

Most of its wells are located near the southwestern marine border with Suriname which has also had overwhelming success with exploratory offshore drilling in the high yielding Guyana-Suriname Basin. Exxon also said that it has the inhouse capacity and resources to deal with any spill for which it is responsible.

The Yellowtail field development will add to Liza One and Two and Payara fields already producing or being readied to. The approval announcement came hours before Exxon said its board had made a final investment decision on the $10 billion project that rights and environmental groups say was lightly scrutinized by cabinet and the regulatory Environmental Protection Agency (EPA). Daily production is targeted at 250,000 barrels per day.

“Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana and helps provide the world with another reliable source of energy to meet future demands and ensure a secure energy transition,” the company said in a statement, noting that its nearly two dozen successful oil wells since the first in 2015 allows it to so far have access to more than 10 billion barrels of oil in the prolific Guyana Basin. The first barrel of oil was pumped offshore in December 2019, making the country of about 800,000 people one of the world’s newest oil producers.

Jumping into the fray Wednesday, the main opposition People’s National Congress (PNC) argued that the government appears to be happy with a professionally weak EPA and a natural resources ministry that also lacks technical capabilities.

“I have pointed out that the government is not improving the capacity of the EPA, which means that the government itself is creating the conditions for environmental disaster in Guyana.  If the basic step of giving the EPA the human and other resources it needs to be able to do their work isn’t taken, then what in essence the government is saying is we don’t care,” the local Kaieteur Newspaper quoted him as saying.

Former EPA chief Vincent Adams argued this week, as well, that the company must be made to have adequate insurance and not be allowed “to water down” the language in legal documents linked to this issue. He said the local environmental agency had agreed with Exxon during his time to ensure that there was at least $2.5 billion in insurance oil spill coverage. The company which controls the high yielding Stabroek Block along with American owned Hess Oil and CNOOC of China says it is “committed to paying all legitimate costs in the unlikely event of an oil spill.”

The company recently said that it is already preparing to apply for approval for a fifth oil field and could be ready to submit final documents by the last quarter of this year.

The success of the Stabroek Block has pushed most of the world’s leading oil firms to buy into neighboring blocks or to apply for concessions near Exxon’s concession. Government has already said that it will auction off several remaining blocks by the end of this year, including portions of unexplored areas by companies or those which have been given to the state because no commercial quantities of oil and gas had been found.

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