Guyana receives $400M from ExxonMobil for flaring –EPA Head

─ fees increased from USD$30 to USD$45

Executive Director of the Environmental Protection Agency (EPA) Kemraj Parsram, said the agency has received approximately $400 million in flaring fees from US oil giant, ExxonMobil.

The fees form part of an amendment to the Liza phase one environmental permit which saw an installed fee for increased flaring activity at the Liza Destiny operations. The amendment was instituted in May and requires the operator to pay US$30 per ton of carbon emitted.

During an interview on local radio programme Guyana’s Oil & You on Thursday, Parsram emphasised that the policy of EPA and the Government of Guyana has always been zero routine flaring.

Flaring is the practice of burning the natural gas to ensure safe operations onboard the floating production, storage and offloading vessel (FPSO). In the case of Guyana, Exxon was forced to flare above the pilot level due to a defective gas compressor.

“The EPA has been engaged with the operator and we have agreed on a way on how we can achieve compliance in this regard. It must be noted that the operator has and continues to show effort in addressing the issue and meeting. We have weekly meetings to discuss the status and the progress in meeting this agreed compliance,” the Executive Director explained. 

Concerns were raised about Exxon and its consortium of oil companies being able to recover the $400 million in fees as per the accounting procedure in the Production Sharing Agreement (PSA). Vice President, Dr. Bharrat Jagdeo, MP, however, affirmed that the Government will not be allowing the oil giant to recover these fees. 

Due to the damaged compressor, Exxon was compelled to flare natural gas of 15 million standard cubic feet per day (mmscfd) for several months. However, Parsram stated that the operator was able to reduce flaring to six-mmscfd.

“We are not at pilot flare as yet, but based on the information provided to us and the discussions that we have had, the plan is to fix this issue completely by year end. Based on the efforts and the progress what we have seen so far, we find this reasonable,”he noted.

Importantly, the EPA Director said subsequent to Exxon reducing its flaring, the agency recently moved to increase the USD$30 fee to USD$45 per ton of carbon emitted.

Notwithstanding this, Parsram emphasised that the EPA is working in partnership with the operator to ensure zero-routine flaring.

On the side of the compromised gas compressor, ExxonMobil has already put in an order for a new compressor from its supplier. That equipment is set to arrive in Guyana by the end of 2021.