GEORGETOWN (Reuters) - Guyana's environmental regulator on Tuesday appealed a court decision that last week declared that the agency and Exxon Mobil (NYSE:XOM) unit breached oil-spill insurance obligations for the company's first offshore project in the country.
Guyana's High Court Justice Sandil Kissoon said in his ruling that Exxon "engaged in a disingenuous attempt" to dilute its obligations under its environmental permit for Liza One project by not fully meeting oil-spill insurance requirements. It gave the company until June 10 to furnish Guyanese authorities with a liability agreement from an insurance company.
According to the court, Guyana's Environment Protect Agency (EPA) allowed Exxon to continue the project even though the company did not provide the necessary insurance guarantees. The government last week rejected the court decision and said it would appeal.
In his filing, the EPA's Executive Director, Kemraj Parsram, said it is true that a permit issued by his office in May last year requires a parent guarantee from Exxon to cover costs not satisfied by its subsidiary for an oil spill. He added that he did not agree with the court's interpretation that the permit calls for this guarantee to be unlimited.
Liza One, the project that inaugurated Guyana's oil production in 2019, has an environmental permit requiring the provision of two forms of insurance coverage, one from the affiliate that stands at $600 million in case of an oil spill, and a parent guarantee committing to cover all costs beyond the $600 million threshold.
Exxon last week said it was "disappointing that the court failed to appreciate and acknowledge the financial capabilities of Exxon Mobil Guyana and its co-venturers to meet their obligations," and said the insurance was already in place.
Local Stabroek News reported Transparency Institute of Guyana, an anti-corruption organization had questioned the agency's appeal.
"The question is why a government would want to appeal such a decision. Would that not be a pyrrhic battle? Would not a government lose more support from the people than it gains even if it won the argument?" the group said, according to the paper.
"The optics seem that there is a regulator that appears more interested in protecting the company that it is supposed to be regulating than the people of Guyana," Frederick Collins, current head of Transparency Institute of Guyana, told Reuters.
Guyanese campaigners and environmentalists have previously challenged the government permitting process, saying that oil production fuels climate change and would damage the country's coral reefs and mangroves.