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Guyana to pay for all cost incurred for litigation brought against ExxonMobil



By kaieteur

Petroleumworld 01 31 2018

Should ExxonMobil be taken before the courts in Guyana or even before a regional or international court for any reason that has direct relations to the company's operations in Guyana, the cost incurred for all legal fees or judgment handed down will be paid by Guyana.

This is stipulated in the 2016 Production Sharing Agreement (PSA) that Minister of Natural Resources, Raphael Trotman signed with ExxonMobil Vice President, Erik Oswald.

Under Annex C of the contract, there is a vast area that deals with cost recovery. This is the range of items the cost for which will be recovered by ExxonMobil before Guyana can see profits.

Annex C has a subheading “Legal expenses.” This states that all legal expenses incurred by ExxonMobil for any matter in direct relation to operations in Guyana shall be included in cost recovery.

The PSA specifies, “All costs and expenses of litigation and legal or related series necessary or expedient for the procuring, perfecting, retention and protection of the contract area and in defending or prosecuting lawsuits involving the contract area or any third party claim arising out of the activities under the agreement or sums paid in respect to legal services necessary or expedient for the protection of the interest of the parties are recoverable. Where legal services are rendered in such matters by salaried or regularly retained lawyers of the contractor or an affiliated company of the parties comprising contractor, such compensation will be included instead under sub-section 3, 1 (B) or 3.1(D) above as application”

Subsection 3, 1(B) speaks to labour and associated labour costs and 3, 1 (D) speaks to third party contracts.

If there is an oil spill and ExxonMobil is sued, Guyana will pay the price. This annex in the contract harmonizes with what environmentalists have been saying about the provisions of the Environmental Impact Assessment (EIA).

It was earlier reported that the Environmental Protection Agency (EPA) accepted an EIA from the oil giant that is weak compared to that given to some other countries.

The impact of an oil spill could be major for Guyana and its neighbours.
Environmentalists noted that there is nothing in the EIA that speaks to how Guyana's neighbours will be compensated. What was clear is that ExxonMobil did not commit to bearing the legal or financial responsibility in the event of a disaster.

There is a possibility that neighbouring countries, when environmental damage occurs, can move against Guyana. If the burden is left to bear by Guyana, the country may have to pay damages equivalent to years of oil revenues.

Reporting from kaieteur news. 30 2018

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