The First Constitutional Fight Over Oil Drilling in the Caribbean Ramps Up in Guyana

An offshore drilling rig.
Photo: Gerald Herbert (AP)

Two Guyanese climate activists are taking their nation’s government to court. Late last month, the plaintiffs filed a lawsuit alleging that a deal Guyanese officials struck with Exxon allowing the energy company to expand its oil production off the country’s coast violates their right and the right of future generations to a healthy environment.

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“These rights are in the constitution,” said Troy Thomas, a professor of mathematics, physics, and statistics at the University of Guyana and one of the plaintiffs. “They couldn’t be stated more clearly.”

The case is a groundbreaking one for the Caribbean and follows a wave of other lawsuits around the world taking on oil companies and governments on constitutional grounds. In December 2019, citizens won a case against the Dutch government for failing to properly address climate change and violating human rights while German activists won a similar case earlier this year. Yet another case brought by Dutch citizens against Shell for its climate failures was decided in citizens’ favor last week.

The Guyanese suit focuses on the Stabroek petroleum exploration block, a 10,347-square-mile (26,800-square-kilometer) tract located 120 miles (193 kilometers) off Guyana’s coast. The country signed the block over to ENH—a joint venture between energy companies ExxonMobil, the Hess Corporation, and a subsidiary of a large national oil company of China—in 2016.

The patch of ocean constitutes Exxon’s single biggest oil development besides the Permian Basin in the U.S. The firm estimates the area could yield at least 8 billion barrels of crude oil and trillions of cubic feet of natural gas.

The oil consortium began extracting oil from the first stage of the project in 2019, and it wants to ramp things up quickly. By 2025, it plans to extract 750,000 barrels of oil every day. Lawyers with the Center for International Environmental Law, who are supporting the case, estimate that by then, the project could release 4.3 gigatons of carbon dioxide into the atmosphere.

“And that’s in a country that isn’t emitting right now and is actually a net positive for the climate,” said Thomas, whose co-plaintiff is a 21-year-old Indigenous tour guide named Quadad de Freitas.

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According to the United Nations, Guyana is one of only a handful of countries that are carbon sinks, meaning the country’s forests sequester more carbon than all national human activities inside its borders generate. The nation has also committed to reaching 100% renewable energy under the Paris Agreement as long as it receives aid to do so since it’s a poor country. Yet if drilling is allowed to continue, it would worsen the climate crisis, which would hit the Guyanese people particularly hard.

The case points to numerous impacts on Guyana. Among them are ocean acidification, which threatens the stability of Guyana’s rich and biodiverse ecosystems as well as fisheries that provide jobs and food security. Sea level rise also threatens Guyana since much of the nation, including its capital city Georgetown, lies at or even below sea level.

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On top of all this, the plaintiffs and their supporters say the oil deal puts Guyanese citizens in economic peril since its scheme has the nation bearing most of the upfront development costs—including the costs of exploration from years past.

“The deal that Guyana negotiated with Exxon sees the people of Guyana actually paying for Exxon’s exploration and production operations in its exploration and development operations in Guyanese waters,” said Carroll Muffett, president of the Center for International Environmental Law. “And not only [paying for] ongoing operations, but also going back over a span of more than 15 years. So this is more than $900 million that Guyana has to repay Exxon for this infrastructure development.”

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It’s a particularly risky contract because research shows that the market outlook for the fossil fuel industry—and particularly for Exxon—isn’t looking good. It’s unclear how much money the consortium will be able to make from the oil the Guyana project produces. One analysis found that the agreement will lead the nation to “experience total cash losses in their annual budget of $160 million,” and force leaders to borrow nearly half a billion dollars to pay for annual expenses on the oil project since revenue will likely not cover the operating costs. In a nation racked by poverty, the deal could end up making matters worse for everyday people in addition to the climate damage.

“It’s a very exploitative deal,” Melinda Janki, who leads the legal team for the case, said in an email.

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Until ENH began its operations, Guyana had never produced oil before. Thomas says this is exactly the wrong time for the nation to start.

“We shouldn’t be getting into petroleum development. It’s not the energy source of the future. We should be looking at renewables,” he said.

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Thomas said if the suit is successful, the state could respond by better regulating the fossil fuel project and placing caps on how much oil can be extracted. But the best possible outcome would be for the case to force the state to end its contract with the oil developers altogether.

“We should all have the goal of preserving the environment, we all should be doing that whether or not we have it in our constitution,” he said. “So really, ending the project would be the best thing to do for the world ... and it would also be the best way to protect our constitutional rights.”

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Earther staff writer. Blogs about energy, animals, why we shouldn't trust the private sector to solve the climate crisis, etc. Has an essay in the 2021 book The World We Need.

DISCUSSION

dnapl
Dense non aqueous phase liquid

Someone very smart will have to figure out how a country like Gayana can generate income from the climate mitigation/adaptation (e.g. renewables) supply chain (from soup to nuts) that would make natural resources exploitation like this less attractive financially.

From googling a bit, it looks like the royalties and profit sharing of this oil (and gas?) production will generate a bunch of income for the Guyana government. An example of natural resources exploitation structured pretty well by a country would be Norway with its oil fund.

Having natural resources mined and processed elsewhere for renewables (say, solar, wind and batteries) and manufactured into parts and the whole elsewhere and shipped by others from elsewhere and turned into renewables projects planned by others elsewhere and EPC’d (engineering, procurement and construction) by others from elsewhere and financed through something like a public private partnership (3P) by others elsewhere and having profits along the supply chain from construction and operation  circulate mostly elsewhere - may not help out a country as much. Then again...

...maybe cheap electricity from renewables will spur economic development so to leapfrog the country into a knowledge based economy like those in the west and allow for folks to do lots of other things.