By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government has confirmed that oil explorer Bahamas Petroleum Company (BPC) has fulfilled all its required licence and regulatory obligations, effectively renewing the oil explorer’s licences for another three years.
Tribune Business understands that BPC will this morning release a statement to the London capital markets detailing this, and that the Government’s desire to hold a referendum on whether to permit oil exploration in the Bahamas will release it from its obligation to spud a first well by April 26,2013.
The Government is understood to have provided the confirmation BPC has long been seeking via a letter from environment and housing minister, Kenred Dorsette, with the resulting clarity boosting its efforts on a variety of fronts.
For starters, the licence renewal will give BPC’s potential joint venture ‘farm in’ partners on the first well extra confidence as to the Government’s position, enabling negotiations to be conducted and concluded much more swiftly.
And, by clearing up the uncertainty over whether BPC’s licences were going to be renewed, the Government has also paved the way for the company to proceed with its Bahamian Depository Receipt (BDR) offering to Bahamian institutional and retail shareholders.
The renewal of BPC’s licences, which in theory expired on April 26, 2012, should have been a relative formality. Renewal was conditional on the company fulfilling its obligations, something it was always confident it had accomplished.
BPC at the time set it out thus: “The company confirms that its petroleum exploration licenses state that: ‘Where the licensee applies for renewal and has complied with the Act, regulations and the terms and conditions contained in this license, the Governor-General shall renew this ‘licence for a further period of three years.’
“Bahamas Petroleum Company believes it has significantly exceeded all license commitments and obligations, with cumulative expenditure in excess of $50 million.”
However, after oil drilling and exploration became a political issue in the May general election, the then-Ingraham administration refused to confirm the BPC licence renewals and returned the company’s fee payments to it.
Now, some four months after the general election, it appears that BPC has finally got the licence confirmation it has been seeking.
While the licences require BPC to ‘spud’ its first Bahamian well by April 26 next year, sources close to the company confirmed to Tribune Business this requirement was set to be waived due to the Government’s insistence on holding a referendum on oil drilling at an as-yet unknown date.
The confirmation has not come without minor hiccups, however. Prime Minister Perry Christie’s referendum comments last week are understood to have knocked 15 per cent off BPC’s share price after they became public the following day.
Simon Potter, BPC’s chief executive, could not be reached for comment last night by Tribune Business. However, in an interview with this newspaper last month, he said the company was “working on business as usual” when it came to its licences.
Adding that BPC had met the renewal conditions “many times over, many fold”, he said: “We’re very clear on what our obligations are, and are looking forward to working with the Government to ensure we achieve them as best we can, both from an environmental and economic point of view.”
In a presentation given to the Trades Union Congress (TUC) at end-July, BPC’s chief operating officer, Dr Paul Gucwa, said the Government could earn a collective $30 billion in royalty income during “the first 10 years of production” if projected quantities of oil are discovered in Bahamian waters.
Dr Gucwa said BPC’s activities over the next two years - if they were allowed to proceed and discovered the commercial quantities of oil forecast - “could help rebase the Bahamian economy”.
Noting that there was time to train Bahamians for the jobs that may be created, Dr Gucwa said that based on there being two billion barrels of oil in Bahamian waters, production would take place over three stages.
The first would involve drilling 15 wells, with production set to peak at more than 72 million barrels per year in the first year.
Explaining that this initial phase was designed to provide BPC with some income to offset development costs, Dr Gucwa said the second phase would involve a further 21 wells.
And production, according to his presentation, would peak at over 160 million barrels per year during the sixth-seventh years of drilling, encompassing a third development phase.
The TUC presentation showed that the Government would start earning royalty income, some 12.5 per cent of each barrel extracted and rising ultimately to 25 per cent, in the third-fourth year of BPC’s activities if exploration proved successful.
Collective royalty income, forecast as being between $3-$4 billion per year, was set to hit $30 billion over the 10-year period between the fourth and 14th year of BPC’s work, the company projected.
Comments
BiminiHomeowner 11 years, 7 months ago
Every major economy on the planet is developing plans to move away from oil as the base of their energy needs. Oil is risky, it is dirty, and it is finite.
For the Bahamas to consider risking their entire tourism industry for an industry that is that has so many negative aspects to it is unfathomable.
It is not a question of whether there will be a spill or not, it is a question of when and how bad?
concernedcitizen 11 years, 7 months ago
where has bpc invested 50 million dollars ,,lmao .bpc is the front company between our oil ,if there is any ,and the treasury ..now they have the rights they will go off and find a partner with the equipment ..Bahamians if there is a spill go knock on BPC door on the Ilse of Wight and see what recourse we have as a country ,,lmao
TalRussell 11 years, 7 months ago
Comrades next nothing is known by the natives about this foreign oil exploration company known as BPC?
PM Christie it's time you produce all the details on a company you personally as a lawyer represented while in opposition, meaning there is really no need for your government to pour over their records, you done know more about them and their financial capabilities and true ownership than any other native.
The IMF has just stated that the long term economic benefit of drilling for oil in Bahamaland's waters must first be weighed against the tremendous risks to our environment?
http://thetribune.media.clients.ellin...">Comrades do you really want these steel drill bits slamming into the floors Bahamaland's waters? by TalRussell
242352 11 years, 7 months ago
Hey Tal,
Perhaps you can ask your yellow shirt leader who Bluewater was while you are at it.
I don't think that the yellow shirts can ever be trusted to be honest with us the regular natives! They only want to put secret monies in the select yellow shirts Swiss bank accounts. Didn't SLOP have a secert Swiss bank account? I wounder if Lady SLOP has spent it all yet????
bahamiandude242 11 years, 7 months ago
They CAN and WILL destroy two of our top industries Fishing AND Tourism when they cause a spill. Then we will become even worse than Haiti. These are the same greedy people that caused that spill in the US a few months back. The dont care about this country only filling their pockets, keep that in mind. They will then pay the gov and media not report on it or push propaganda on the people that everything is fine. Looks like they are greasing Perry real good so he can force the oil drilling law down our throats. They got a new boy to grease now that Inghram is gone. Our leaders are traitors.
TalRussell 11 years, 7 months ago
In the red shirts, like in life, leadership popularity is fleeting. Ask the former and now "not long left before he is removed" new leader.
I do not support either licensing the numbers rackets operators or oil drilling in Bahamaland's waters.
In both cases if PM Christie is not cautious, having accepted cash from the numbers man's to win Decision Day 2012, and has acknowledged that he acted personally as the attorney of record for BPC, he may find his administration in rolling some bad dice early trouble with the natives?
by TalRussell
clarken 11 years, 7 months ago
It is eternally sad the way people attempt to perpetrate lies not only as truth but susbstantive truth. Despite all the negeatives and potential negatives of oil exploration, their is absolutely no currrent projection of any economy in the world surviving without the use of oil for energy "Biminihomeowner". "Talrusell" and "Bahamiandude242" probably the largest oil spill in world history occurred just a couple years ago only a few miles from our own waters. What has the history of this oil spill been? I think it should serve as the guide for any statement and I dare say policy regarding oil exploration in our waters. The economies are environmentally and tourism based and the ecology is virtually the same. How many economies have faild since the oil spill? How many industries have collapsed? How many cties which were vibrant have seen residents flee and have disappeared? I think it would be interesting to compare the impact of hurricane Katrina, a risk whic occurs every year to the oil spill which is an occasional risk.
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