Major oil spill without viable insurance plan will be Guyana’s death blow


Mr. Editor,

Imagine that you were lucky enough to have a building plot. You hire a company of contractors to fence off your land and you intend to use them to build your house. But when you look at the fencing bill, the numbers don’t add up. You will be outraged and seek to understand why you were overcharged and ask for a refund. Surely you wouldn’t approve of the next task to build the house. If the bill is questionable for a small item like the fence, why would you give this company a much more expensive task? But this is what is happening today in Guyana with the rush to approve another oil project when it appears that we still have not finished auditing the pre-contractual costs until 2015. In addition, with every project we increase the chances of a major oil spill that can ruin Guyana.

The overestimation of the pre-contract costs of US $ 460 million that ran from 1999 to 2015 was made public by Chris Ram in May 2018. The government hired a contractor in December 2019 to audit the pre-contract cost, but he is now 2 years old. and there was no indication if the audit is complete or when it will be. In the meantime, we have approved Liza 1, Liza 2 and Payara with a total investment cost of approximately US $ 18.5 billion. There has been no indication whether an audit of these investment costs has been carried out although the window is closing on the audit of these costs. Anomalies have been raised regarding capital costs when comparing data between wells, see here: -us4-3-billion-plus-for-payara-when-compared-to-liza-phase-1 /.

Now it looks like we are in a hurry to approve a fourth project named YellowTail which is expected to cost $ 9 billion. EPA meetings are now announced for YellowTail. However, we still don’t know how many crucial issues raised at the EPA meetings on the onshore gas project have been addressed, if any. It seems that the government is content to hold meetings and is not transparent on the issues raised by civil society. Why rush to approve new oil projects when serious questions remain about the cost of these projects? But it’s not just the cost that is an issue – the question of who pays the cost of a major oil spill is more troubling.

We play Russian roulette, where with each oil project we increase the number of bullets that we place in the barrel of the rifle. Let’s say for each project there is a 90% chance for the life of the project that there will be no oil spill. If we have only one project, there is a 10% chance that there will be an oil spill. If we have 4 projects, that increases the probability of an oil spill to 34%. The relationship is simple, the more projects we approve, the more the chances of an oil spill increase. We have over 20 discoveries in the Stabroek Oil block. At some point our luck will run out and a major oil spill without a viable insurance plan will be Guyana’s death blow. We demand that no further oil projects be approved until the pre-contractual costs and capital costs of US $ 18.5 billion for the three oil wells to date are verified and, more importantly, that parent oil companies bear the entire insurance burden of any oil spill. .


Darchanand Khusial

On behalf of the OGGN

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