State has a right to be added to legal proceedings affecting petroleum operations – High Court rules

The Liza Unity FPSO

Guyana’s High Court on Monday ruled that Section 94 (1) of the Petroleum Activities Act 2023 requires that the State, as of right, must be added to proceedings seeking to cancel, prohibit the grant of, or dictate the terms of, environmental permits granted to ExxonMobil Guyana Ltd, and its partners.

Both the State and ExxonMobil were also awarded costs in the sum of $300,000 to be paid by July 24, 2024, as the Court was of the view that Section 94 (1) of the Act required neither elucidation or recourse to any aid of statutory interpretation but the literal rule to determine its intent, and that the intent was patent, and mandatory.

This decision is a ruling on a preliminary point in an action brought by Sherlina Nageer (“the Applicant”) against the Environmental Protection Agency (EPA) on January 25, 2024.

In this action, the Applicant seeks various orders, including the cancellation of the environmental permit granted in respect of Liza Phase 2.

Notably, neither the State or ExxonMobil were named as parties to these proceedings.

After the action was filed, both the State and ExxonMobil filed Notices of Application asking to be added as parties. Both applications were opposed by the Applicant.

The State, in particular, argued that Section 94 (1) of the Act mandates that the Minister of Natural Resources be added as of right to these proceedings, as they constitute proceedings which arise out of the Act which affect the interest of the State. It was argued that the proceedings could impact the environmental permit regarding Liza Phase 2, and that such an eventuality could trigger the cessation, even if temporarily, of that project.

The State further argued that an order cancelling the permit, or prohibiting the grant of a new permit could negatively affect Government’s intended revenue from royalties and Guyana’s share of profit oil, public infrastructural works to be funded by that revenue, and could pose additional legal issues for Guyana.

Counsel for ExxonMobil argued that the company had a clear interest in the outcome of the case and was entitled to be added as a party under S. 13 (1) of the Judicial Review Act, R. 31.01 of the Supreme Court of Guyana Civil Procedure Rules 2016, and Section 94 (1) of the Petroleum Activities Act.

After reading the pleadings and submissions by all parties, Justice Simone Morris Ramlall found that the State does have an interest in the subject matter of the proceedings brought by the Applicant, and stands to be affected by the grant of reliefs sought. Consequently, the judge found that Section 94 (1) of the Petroleum Activities Act mandates that the Minister of Natural Resources be named as a party as the matter arises out of petroleum operations.

Morris-Ramlall J also agreed with the arguments by Counsel for ExxonMobil.

As a result, the court has ordered that the Minister of Natural Resources, represented by the Attorney General, be added as the Third Named Respondent, and ExxonMobil be added as the Second Named Respondent.

The Court will now proceed to consider the questions raised in the substantive action. The State and ExxonMobil are now required to file their Affidavits in Defence by July 8, 2024, and the Applicant must file its Affidavit in Reply by July 22, 2024.

All parties are then required to file and exchange submissions by or before August 5, 2024, after which the court will convene for a hearing again on August 16, 2024 at 11.30am.

The Minister of Natural Resources was represented by Chevy Devonish, Senior Legal Advisor, on behalf of the Attorney General, Mohabor Anil Nandlall SC MP.

ExxonMobil was represented by Edward Luckhoo SC, Andrew Pollard SC, Eleanor Luckhoo, and Shawn Shewram.