GEORGETOWN, Guyana, CMC – The Environmental Protection Agency (EPA) has served Esso Exploration and Production Guyana Limited (EEPGL) with an Enforcement Notice directing it to have an Unlimited Liability Parent Company Guarantee in place as stipulated by the High Court.
The EPA’s Attorney, Sanjeev Datadin, disclosed in the Court of Appeal on Thursday as the EPA ‘teamed up’ with the oil company to challenge the High Court’s decision that an unlimited Parent Company Guarantee Agreement is in place within 30 days.
“The notice as required has been issued…The notice has been issued, and it has been issued subject to these proceedings,” Datadin told Justice of Appeal Rishi Persaud as he heard preliminary arguments on whether the appeal has the prospect of succeeding.
High Court Judge Sandil Kissoon gave the 30-day ultimatum. The judge ruled that the oil company must provide an unlimited Parent Company Guarantee Agreement by the Environmental Permit for the Liza Petroleum Production Project in the Stabroek Block or face suspension.
But Datadin, in representing the interest of the EPA, told the Court of Appeal that the High Court judge erred in law. He argued that the Environmental Protection Act and the Environmental Permit do not provide for a complete parent company guarantee agreement but rather a specified number to be stated. “Both the permit and the Act refer to a fixed sum,” Datadin argued.
He also told the Court that an insurance policy of US$600M was secured for the Liza Phase 1 Development Project in keeping with the legal framework. At the same time, negotiations on an affiliate company guarantee have advanced. That guarantee, according to Exxon, has been placed at US$2B.
Noting that both the EPA and the oil company have abided by the Environmental Protection Act, Mr. Datadin maintained that there is no requirement under the Environmental Permit for an unlimited guarantee.
“There is nowhere in the permit or the act that unlimited exists. Unlimited has come about through a misunderstanding or a misinterpretation, and now the Court is saying unlimited, and if you don’t do this within the stated time, this unlimited guarantee and assurance, then the permit is suspended,” he said.
He argued further that the Court, by ordering the EPA to issue the Enforcement Notice, has usurped the powers of the Environmental Protection Agency and has, therefore, overreached its authority.
The oil company’s Attorney, Senior Counsel Edward Luckhoo, put forward similar arguments, telling the Court of Appeal that the Environmental Permit does not require an unlimited parent or affiliate guarantee.
He said the High Court, in its decision, introduced the concept of an unlimited guarantee.
“The trial judge entirely misinterpreted condition 14 of the permit,” the Senior Counsel said, adding that the legal framework provides for a specified amount.
But Senior Counsel Seenath Jairam – the attorney for the First and Second Respondents Frederick Collins and Godfrey Whyte – told the Court that Counsel for EPA and EEPGL should desist from cherry-picking bits and pieces from Condition 14 of the Environmental Permit.
The Senior Counsel told the Court that Esso has been conducting oil operations offshore Guyana without complying with Condition 14 of the Environmental Permit. He reasoned that should an oil spill occur, the country could be set back for decades due to such devastation if no insurance existed.
Senior Counsel Jairam said that under Condition 14, the permit holder is liable for all costs associated with the clean-up, restoration, and damages caused by the discharge of any contaminant.
He argued that insurance never covers all damages, hence the need for a parent company guarantee. “The parent company guarantee doesn’t cost them a penny. It’s simple, you assure that you can pay if you are called upon, and since Esso has been boasting that it operates optimally, there is no risk,” he told the Court while challenging the oil company to provide the unlimited parent company guarantee.
A date for the ruling will be announced subsequently.
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