Companies obligated to have mitigating oil spills high on agenda – insurance executive

Companies currently drilling for oil in Guyana have an obligation to ensure that mitigating oil spills is high on their agenda, while Government has a duty to scrutinise these plans.
This view was expressed by Mark Kabierschke, the energy industry’s regional leader for Latin America at multinational insurance company, Willis Towers Watson. He was at the time speaking at the conclusion of an oil and gas insurance seminar recently.
“In general, oil companies will have anything to do with pollution and oil spills, high up on their risk management and mitigating agenda. So they will have mechanisms to either try to mitigate that risk or insure against something happening,” Kabierschke said.
“Oil companies will, in short, have proper insurance in place to make sure that any impact is either corrected or paid,” Kabierschke further explained to this publication during an exclusive interview.
He noted that in some cases, bigger companies can self-insure. However, he pointed to the importance of transparency and scrutiny to ensure the practice is sustainable when an entire industry is being built up from the ground, as is the case in Guyana.
Kabierschke acknowledged that while oil companies tend to be proactive and engage communities affected by oil spills, it is ultimately up to the Government to ensure that operators comply with their obligations.
“There’s an insurance market catering with specific products. Insurance companies can also self-insure. I would, in any case, recommend that there’s enough transparency and scrutiny to make sure it is a sustainable practice when you’re building up your industry.”
“Definitely a developed oil industry will have Governments follow up the process and ensure [compliance]. The main advice, us coming from the risk advocacy side, is make sure that you have a good understanding, a good map if the risks involved with the oil sector.”
It was reported in sections of the media earlier this year that ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) had secured local insurance. In fact, reports had indicated that they were pursuing allowing coverage exceeding the insurance sum to be assumed by the parent company.
Environmental Protection Agency (EPA) Director, Dr Vince Adams, has, in fact, said that oil spill liabilities will be covered by the oil operators responsible. According to Adams earlier this year, the companies’ environmental permits spell this out.
Since ExxonMobil announced its oil find in the Liza-1 well in 2015, a pertinent question has been the capacity of the relevant agencies to protect the environment in case of an oil spill. It is a topic that has regularly been raised at public lectures.
An EPA study had found that while an oil spill is possible, factors such as the location of ExxonMobil’s affiliates’ operations, combined with the region’s water temperature would minimise the effects.
Work has been ongoing on a National Oil Spill Contingency Plan (NOSCP), with Civil Defence Commission (CDC) Director, Lieutenant Colonel Kester Craig, promising that the plan will be completed by this month.
The draft plan sets out a three-tier system of dealing with oil spills. There is a tier one level that deals with the local and facility-level response; the tier two level, which is a national response to the oil spill and the regional and international response to an oil spill.