Guyana Proposes Oil Spill Bill To Hold Companies Liable For Damages

The Government of Guyana has presented a new bill to Parliament that seeks to make companies liable for oil spill-related damages, including those from vessels.

The legislation, titled the Oil Pollution Prevention, Preparedness, Response, and Responsibility Bill 2025 was published in the Official Gazette and will be discussed by lawmakers in the coming weeks.

According to the bill, responsible parties will have to provide financial assurance to cover spill damages, carry out regular inspections and audits, and address any problems identified during checks.

Companies that fail to do so could face penalties, including the suspension of licenses to explore and produce oil.

The South American country, where all crude and gas output comes from offshore fields, is making efforts to enhance oversight of its growing oil industry.

Guyana’s oil production, led by a consortium headed by ExxonMobil, is expected to exceed 900,000 barrels per day.

The bill also proposes the formation of a competent national authority to oversee spill-related activities. The country’s Oil Spill Committee would be assigned more formal responsibilities to monitor the industry and coordinate responses in case of any incidents.

Prime Minister Mark Phillips, who tabled the bill, said that the proposed law aims to put in place preventative, restorative, and compensatory measures for oil spill incidents within Guyana’s national territory.

The pressure to introduce the bill comes after a significant oil spill off the coast of Tobago in early 2024, when a tug and barge ran aground, causing a serious environmental damage.

In Guyana, it also added to ongoing public discussions about the need for a comprehensive national response mechanism as offshore oil production continues to grow.

While the government officials have said that a large-scale offshore spill in Guyana is extremely unlikely, they discussed the importance of being prepared.

ExxonMobil currently holds a US$600 million per-occurrence environmental liability insurance policy, along with a US$2 billion parent company guarantee to cover possible damages.

A capping stack- an essential device used to seal a blown-out well- was brought into Guyana in 2024, to support emergency response efforts. This equipment will enhance the country’s readiness for any unforeseen oil-related emergencies.

The bill coincides with ExxonMobil facing legal scrutiny. In 2023, Guyana’s High Court found that the company did not meet a permit condition requiring it to have unlimited and uncapped liability for cleanup and damages caused by any discharge of contaminants.

The Environmental Protection Agency has appealed the ruling, and the decision remains on hold while the legal process continues.

Guyana began producing oil offshore in December 2019. Since then, it has become one of the world’s fastest-growing oil producers.

In 2023, it was ranked as Latin America’s fifth largest oil exporter, after Brazil, Mexico, Venezuela, and Colombia.

ExxonMobil’s consortium, which includes US-based Hess and China’s CNOOC, produced an average of 631,000 barrels per day in the first quarter of 2024- marking a 3% increase compared to the same period last year.

Guyana is a net-zero carbon emission country and does not permit routine flaring from offshore vessels. More than 80% of its land is covered by forests.

Reference: Reuters

Source: Maritime Shipping News