Guyana to Request Stronger Financial Guarantees from Oil Operators

November 23, 2021

World Energy Reports LLC.
unity-guyanas-second-production-recently-126962.jpg

Guyana is getting ready to raise requirements on oil operators to protect the nation against spills and future removal costs of production platforms, the head of its environmental agency told Reuters.

Guyana currently requires financial assurance, a type of insurance, to cover emergency responses to accidents. Financial assurance is also used at times in some other countries to cover decommissioning infrastructure, especially offshore oil rigs.

But as the newest South American crude-producing nation fashions a regulatory framework for its oil industry, it is pressing a consortium led by Exxon Mobil Corp for greater security, said Kemraj Parsram, head of Guyana's Environmental Protection Agency, in a interview last week.

Under discussion with Exxon are a draft agreement that would add parent guarantee and revise the type of events covered in the Exxon group's $5 billion self-insurance policy, he said.

"We have to make sure there is adequate coverage," said Parsram.

Exxon does not comment on commercial and regulatory discussions but follows international environmental standards where laws and regulations do not exist and goes beyond those where practical, spokesperson Meghan Macdonald said.



Its existing agreement has "extensive assurances" and requires contractors "take responsibility for any adverse event," she said.

The talks with Exxon, the operator in a group that includes Chinese state-run oil company CNOOC and Hess Corp, come amid environmental permit reviews for a third project in the massive Stabroek block.

"We can make changes to any of those permits, it's what we call new standards," he said. "I would love to have it wrapped up in time for when, if we decide, to approve Yellowtail," the third project, Parsram said.

"Insurance is just one of many sources of financing that Exxon Mobil could utilize to pay for response activities, and those activities would not be delayed by discussions with insurers," Macdonald said.

Risk mitigation services firm Aon Plc provides insurance for the first two production platforms, covering up to $600 million each for events including well blowouts, evacuations, pollution and spills cleanup, Parsram said.

As Guyana never demanded financial assurance for platform decommissioning, such costs are not covered by the existing policy.

"We will look at that. All that was part of the discussion," Parsram said. 

(Reporting by Neil Marks in London Additional reporting by Sabrina Valle in Houston Writing by Marianna Parraga Editing by Gary McWilliams and Matthew Lewis)


Floating Production Week delivers unrivaled overview, insight and analysis to the Offshore Floating Production Systems and Technology market

Floating Production Systems Report And Online Database

  • Annual five year outlook and forecast – At the start of each year we prepare a detailed assessment of future deepwater development and forecast the pace of orders for floating production systems over the next five years. Our 2021 annual report looks at market conditions likely to prevail through 2025 and provides our assessment of which of the 200+ floater projects in the planning queue will reach the final investment decision by end-2025
  • Monthly reports - Our monthly reports provide a detailed snapshot of the business sector as of the middle of each month. More than 100 pages of data and industry analysis each month. Excel spreadsheets with each report enable subscribers to tailor the data presentation to their needs. In our May report we revisit the annual forecast and make revisions as needed.
  • Online database - The online database is updated every day – with information direct from primary sources. In the database are details for 200+planned projects, 390+ installations in service, 40+ floaters on order and 40+ floaters available. The database is fully searchable. Customized charts and spreadsheets can be directly produced from the database. Data are easily exported to excel spreadsheet.
  • Customer support - We are available to assist with technical questions about information in the database and reports -- and assist with any questions about using the database search tools.

Here's what you get!

Request a Demo