Exxon Says Guyana Insurance Dispute Could Cut Revenue $350M/Month
KIANA WILBURG
May 22, 2023
Exxon Mobil Corp on Friday said an ongoing dispute over oil-spill insurance in Guyana could halt production at its first offshore platform there, cutting revenue by about $350 million per month.
A Guyanese court this month found Exxon in breach of insurance obligations for Liza One [the Liza Destiny FPSO. OE ], its first offshore oil project, and called for additional insurance adequate to protect against a catastrophic oil spill. The government has appealed the court ruling.
Exxon and partners in an offshore consortium that has produced all the country's oil to date have $600 million in insurance and up to $19 billion in assets in the country, Exxon officials said at media briefing.
The consortium is working with the country's Environmental Protection Agency on financial guarantees to cover damages and remediation of any oil spills, said Exxon Country Manager Alistair Routledge.
Exxon said that if the sides are unable to agree, it could halt output from Lisa One platform and cost about $350 million in lost revenue.
Guyana would incur a hit of $80 million to $88 million to earnings from its share of production, according to the country's National Resource Fund's latest quarterly report.
The court set a June 10 deadline for the group to provide authorities with an unlimited liability agreement.
"We are working with our affiliated companies to finalize those papers to provide them to the EPA after a very exhaustive process," Routledge said.
Liza One, which inaugurated Guyana's oil production in 2019, has an environmental permit requiring provision of two forms of insurance coverage, one from the affiliate that stands at $600 million in case of an oil spill, and a parent guarantee committing to cover all costs beyond the $600 million threshold.
The offshore vessel is pumping over 155,000 barrels of oil per day.
(Reporting by Kiana Wilburg in Georgetown, Guyana/Editing by David Gregorio)
