Guyana
The Guyana Environmental Protection Agency approved a permit for Esso Exploration and Production Guyana Ltd., an oil exploration and production company ("Esso"), a subsidiary of Exxon Mobil Corporation, to conduct offshore oil drilling.
As a condition of obtaining the permit, Esso was required to provide financial guarantees to compensate for any pollution damage that might result from its oil production activities. Two Guyanese citizens requested copies of these guarantees from the Agency, and when their request was denied, they filed a lawsuit.
After examining the environmental permit granted by the Environmental Protection Agency to Esso, the Constitutional and Administrative Court of the Supreme Court of Guyana concluded that the duties, responsibilities and obligations imposed on the company were clear and unequivocal, and that the company assumed unlimited liability for all costs of cleanup, restoration and compensation for any damage resulting from the company's oil operations.
Incorporating the "polluter pays" principle, the permit also required Esso to provide, within a reasonable timeframe, financial guarantees to cover its environmental responsibilities in the form of: 1) insurance; and 2) an unlimited commitment from the parent/subsidiary company (Exxon Mobil) to indemnify the Agency and the Government of Guyana.
The Tribunal held that Esso failed to fulfill its obligation to provide insurance, undertakings, and indemnities within a reasonable timeframe. The Tribunal determined that the insurance Esso held did not meet the terms and conditions of the permit, which required environmental liability insurance as is standard practice in the international oil industry.
The case follows a pattern of similar cases linking violations of the right to a healthy environment to oil drilling in Guyana's maritime territory. The Liza Project, the subject of the lawsuit, is projected to emit approximately 34.545 billion tons of greenhouse gases in the future.
The case also calls for holding one of the fossil fuel companies most responsible for GHG emissions, Exxon Mobil, accountable for evading legal responsibilities through the creation of subsidiary companies for oil exploitation.
- Citizens of Guyana
- Environmental Protection Agency (EPA)
- Esso Exploration and Production Guyana Ltd (Company)
More than eight years after the first oil discovery off the coast of Guyana (Stabroek block) and almost three years after production began by the defendant company, it is still unclear what the status of insurance coverage for the works is and whether the necessary insurance certificates are available, in accordance with national environmental regulations.
The plaintiffs' primary motivation stems from past oil spills and disasters, such as the 2010 BP Deepwater Horizon disaster, which cost the company over $65 billion and devastated the environment and livelihoods. Unlike the United States, Guyana lacks experience in the oil industry and the oil and gas experts, engineers, and other technical personnel necessary to manage its petroleum sector.
Guyana also lacks the infrastructure needed to quickly plug a well and mitigate the damage caused by a potential oil spill. A World Bank capacity-building project has been downgraded to moderately unsatisfactory.
Standards
- Environmental Protection Act No. 11 of 1996
Beginning
- Polluter-Pays Principle.
Precautionary principle
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