ExxonMobil Guyana Limited (EMGL) and its partners are now required to secure oil spill insurance through insurance companies with local content certificates. This is according to Kemraj Parsram, Executive Director of the Environmental Protection Agency (EPA), who stated that this new provision, embedded in the permits issued to oil companies, is a major win for local content.
Parsram, during an interview on the Starting Point Podcast, outlined improvements the EPA has made to its regulatory framework, including key changes to oil and gas permits.
The director explained that the permits now allow Guyanese insurance companies with local content certificates to provide insurance coverage for Stabroek Block activities. According to him, this addition stems from the Bank of Guyana’s legislative requirements.
“In the early days, we didn’t have legislation that allowed local insurers to join and provide that level of financial assurance. So, in our first case, it had to go international,” he said. To this end, Parsram described the change as a boost for local content, giving Guyanese insurers a direct opportunity to benefit.
“But what is important, the amount of financial assurance is not watered down by having local players versus international players. However, it is done, whether it’s a combination of local insurers and international insurance, they must meet that level of liability in any case. But the good thing is that local content is important, and it’s allowing the local players to benefit from that as well. So, everything doesn’t go out of Guyana, so to speak,” he added.
Speaking about the broader financial assurance requirements, the director noted that these include insurance, a parent company guarantee, and the Oil Pollution Prevention Responsibility Act, which was recently passed by the government. This new piece of legislation outlines regulatory measures developers must follow to ensure prevention, preparedness, response capability, and financial responsibility.
“So, if there is whatever cost it is, it is on the developer in this case. The government of Guyana and the EPA will assist, because it’s our responsibility, but the cost for cleanup, response and all these other things is the responsibility of the developer in this case, or the operator,” he stated.
The EPA director further emphasised that prevention is the agency’s first line of defence, which is why significant sections of the permits address preventative measures. He explained that ExxonMobil is required to submit a safety report for every well before it is drilled.
“We sit down with the operator, the EPA…the GGMC (Guyana Geology and Mines Commission) and the Ministry of Natural Resources would sit with the operator, and they will present what their design is and how all the safety measures are put in place, and we give the go-ahead after we’re satisfied,” Parsram explained.
He also pointed to other engineering safeguards, such as blowout preventers and a capping stack that is already in-country to quickly seal a well should a blowout occur.
Moreover, EPA permits also require operators to activate their oil spill response plan at least twice within three years. Parsram said this is to ensure that the plans and resources are effective, adequate and can be leveraged immediately in the event of an incident.
Parsram added that these mandatory drills also ensure that operators and their partners fully understand their roles. “So, by putting that sort of testing out on a regular basis, make sure that everybody is prepared and know (their) responsibility, know where the resources are coming from to deal with a tier three spill,” he stated