Vice President, Dr. Bharrat Jagdeo warned today that the recent court ruling the Environmental Protection Agency (EPA) to secure unlimited parent guarantee from ExxonMobil Corporation could have severe international implications for Guyana and potentially hinder future investments in the oil and gas sector.
The ruling, issued on May 3, 2023 found ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), in breach of its insurance obligations for the Liza Phase One Project. High Court Judge, Justice Sandil Kissoon ruled Exxon is required to provide a parent guarantee and an environmental insurance liability from an independent firm within 30 days; otherwise, the permit for the Liza Phase One Project may be suspended.
Vice President Dr. Bharrat Jagdeo expressed concerns about the implications of such a ruling, stating, “When you have a ruling like this, you’re gonna have international consequences. The world sees it.”
He also highlighted the heightened international attention on Guyana, particularly in relation to its oil and gas sector, which is closely monitored by the foreign press. Jagdeo also underscored the significant shift in the level of scrutiny faced by Guyana, comparing it to the past when major disasters would occur without much global awareness.
Now, however, every word and development in the country’s oil and gas sector receives extensive coverage. He said, “In the past, you would have a major disaster here. We lost 55% of our gross domestic product in the 2005 flood. Nobody didn’t even know about it. But now on a daily basis, they hang on to every word that anyone says in the oil sector. Stories emerge all the time”.
Given this context, Jagdeo cautioned against underestimating the global community’s observation of the court case and its potential impact on investor confidence. He stressed that investors are easily influenced by uncertainty, and if efforts to discourage Guyana’s involvement in the industry persist, investors may refrain from undertaking projects in the country.
Exxon recently highlighted its contributions to the local economy, with a disclosed local content spend of $80 billion (US$400 million) and engagement with over 1,500 Guyanese businesses in 2022 alone, amounting to over $180 billion (US$900 million) spent on locals since the initial discovery of oil in 2015. The momentum of such local content investments could be affected if the Liza Phase One Permit is suspended.
