ExxonMobil appeals ruling by Guyanese court over oil spill insurance coverage

American oil giant ExxonMobil said it has appealed a recent Guyanese court ruling forcing it to set aside hundreds of millions of dollars in the event of a major oil spill off the coast of Guyana.

The company said in a statement that the court had failed to consider that Exxon and consortium partners Hess Corporation and China National Overseas Offshore Corporation have the “undoubted ability” to meet their financial obligations in the event of a spill at their operation

The consortium is operating the prolific Stabroek Block near the southeastern border with Suriname.

In the ruling in early May, Guyana’s high court ordered the local environmental agency to obtain independent liability insurance from Exxon’s subsidiary Esso Exploration and Production Limited. It also sought an unlimited guarantee from its parent company in the case of damage caused by operations in the South American country.

The company argued that no insurance company would provide unlimited coverage.

Rights activists and environmentalists fear that a spill could severely impact the country’s marine resources, while devastating the tourism economies of nearby Caribbean nations.

Exxon, the lead operator in the consortium, has argued that a spill is highly unlikely, and that the court had “failed to recognise the ability of the Stabroek block co-venturers to meet our financial obligations, which are supplemented by the insurance that we already have in place and the agreement we reached with the EPA for financial guarantees that exceed industry benchmarks”.

Production began in December 2019, with some 380,000 barrels a day expected to soar to 1.2 million by 2027.

Guyana’s government said last week that it supports the appeal, contending the judge had erred in the ruling, in part because the environmental agency already has agreed with Exxon on the amount of money to assess for each oil field in the event of a spill.

AP