Guyana among few countries taxing oil companies for flaring – VP Jagdeo

Pointing to Guyana’s status as one of the few countries in the world to have established a tax on oil companies for every ton of gas flared, Vice President Bharrat Jagdeo has made it clear that the People’s Progressive Party (PPP) government already has an environmental track record.

During a press conference in New York during the week of the United Nations General Assembly (UNGA), the Vice President responded to questions from the media on whether the government has had discussions with oil giant ExxonMobil about its flaring.

In his response, Jagdeo pointed out that Guyana is one of the few countries who have set up a tax for oil companies whenever they flare outside of the commissioning period. According to Jagdeo, the administration is a firm believer in no flaring.

But when they entered office, it was to find that the former A Partnership for National Unity/Alliance For Change (APNU/AFC) government had left very deficient environmental permits for the Liza one and two developments, which did little to safeguard the environment.

“So, we set about, in that short period of time, to fundamentally change the environmental issues surrounding the development of the gas fields. So, in the new environmental permit that was issued, we have now introduced a tax for flaring that was not there before,” Jagdeo said.

“And we have now established that beyond the commissioning period, any flaring that is done will be taxed US$45 per metric ton of carbon emitted. Very few countries in the world managing an oil and gas industry have such a tax based on carbon emissions. And there’s a second component to the fine, that we will also receive payment for our share of the gas flared.”

He noted that they also made adjustments to the permit that ensured ExxonMobil would handle its waste from cradle to grave, that is, the harmful by products of their oil and gas production from start to finish.

“In many countries, the waste is left by oil companies to handle after their gone. In the new environmental permit, Exxon would be responsible for handling all of that, cradle to grave management of waste, including through their subcontractors. The third component we introduced in the Payara work permit was to manage and treat waste water up to an international standard before it is reinjected,” Jagdeo further explained.

Meanwhile, President Dr. Irfaan Ali, who was present at the press conference, noted that Guyana’s commitment to the environment and climate change has not changed with the instances of Exxon flaring gas.

“Our credentials and activism on climate change would not change. And we are going to pursue an agenda that will see the development of our oil and gas sector without affecting our agenda on climate change. And that is what we took a lot of time to explain and engage other leaders on.”

“And we’ve been able to demonstrate to them that our plan on renewable energy and standing forests, our aggression in supporting the world to come to a decarbonized environment is as strong as it was in the past,” the President said.

It was revealed earlier this month that ExxonMobil has paid approximately $400 million (US$1.9 million) to the Government of Guyana for its flaring of gas at its Liza-1 operations in the Stabroek Block.

This was revealed by Executive Director of the Environmental Protection Agency (EPA), Kemraj Parsaram, during local radio programme – Guyana’s Oil & You. Parsram subsequently told Guyana Times that this fee was paid between late July and early August for the first flaring application that was made. That application, which took effect from May 26, was for a 36-day period.

The EPA was forced to amend the Environmental Permit for the Liza 1 Development Project after the oil company had been flaring excessively following technical issues with its gas compressor on the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel on two separate occasions earlier this year.

The regulatory body engaged Exxon’s local affiliate, Esso Exploration and Production Guyana Limited (EEPGL), to modify the permit back in May to include specific regulatory requirements for flaring of associated gas offshore Guyana, in accordance with the EPA’s legislation. These were missing from the original permit that was issued under the previous APNU/AFC Administration.

At the time, a cost of US$30 per ton of carbon emission was agreed upon, but the EPA Head has revealed that this fee has since been increased to US$45 during discussions with the operator over the past month