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Oil explorer in licence extend over COVID-19

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamas-based oil explorer has voiced optimism that the government will extend its drilling licence beyond year-end despite Florida congressmen lobbying the Trump administration against its plan.

Bahamas Petroleum Company (BPC), in a statement to the markets, confirmed that the COVID-19 pandemic has forced it to push the likely start date for its first exploratory well back to October 2020 from the proposed late May/early June timeframe.

The company has also notified the government that it is exercising the “force majeure” clause in its agreement, which deals with “unforeseeable circumstances” preventing one party from fulfilling the terms of a contract, and will seek a licence extension beyond year-end 2020 for a period equivalent to the pandemic’s duration.

Expressing confidence that such an extension will be granted, BPC said in a statement that the “force majeure” clause in its agreement with the government accounts for epidemics such as COVID-19.

“The company has notified the Government of The Bahamas that, as a consequence of both the international and Bahamian response to the spread of the COVID-19 virus, a force majeure event has occurred (it being noted that the company’s licences and Bahamian regulations specifically define epidemic to be a force majeure event),” BPC said.

“As such, the company is entitled to a corresponding extension to the current exploration term of its licences, equivalent to the duration of the force majeure event (up to a maximum of one year). The impact of the response to the COVID-19 virus on the Bahamian economy and the people of The Bahamas will be extreme, given that the Bahamian economy is heavily dependent on tourism.”

BPC’s project, though, could come under pressure from an unexpected quarter after a group of Florida congressmen and women from the House of Representatives wrote to US secretary of state, Mike Pompeo, on April 17, 2020, to urge the Trump administration to intervene and persuade The Bahamas against permitting oil drilling in its waters due to the perceived threat of any accident to Florida’s beaches and wildlife.

Simon Potter, BPC’s chief executive, declined to respond directly to the letter yesterday, instead talking up the potential economic impact of the oil explorer’s activities for a Bahamian economy that needs a boost more than ever amid the COVID-19 fall-out.

“BPC has licences to explore in Bahamian maritime waters adjacent to the Bahamas-Cuba border,” he said. “BPC will operate strictly within the laws and regulations as set out by the Bahamian sovereign government. Any material oil discovery would introduce to The Bahamas a new industry capable of expanding the Bahamian economy bringing significant revenue receipts, jobs and wealth.”

While many Bahamians remain sceptical as to whether BPC and its prospects of success are for real, it remains one of the most immediate potential sources of economic diversification, tax revenues and foreign currency earnings available to this economy in a post-pandemic world - provided it locates commercial quantities of recoverable oil on the seabed.

The Pompeo letter, though, appears to have cross-party support in the US. While the main promoters are former Democratic National Committee chair, Debbie Wasserman-Schultz and Debbie Mucarsel-Powell, also named as a sponsor is Matt Gaetz, the right-wing Republican congressman known to have close ties and an in-route to the Trump White House.

Other names on the letter include former Florida governor, Charlie Crist, and ex-Clinton administration health secretary, Donna Shalala. The letter to Mr Pompeo urges: “As coastal and near-coastal members of Congress who have been fighting for years to protect the Atlantic Ocean, Straits of Florida, and Eastern Gulf of Mexico from the threat of expanded offshore drilling in US waters, this.. is cause for great concern.

“As the representatives of Florida and east coast communities, we respectfully ask you to join us in protecting the shared coastal economies and ecosystems of the United States and The Bahamas from offshore drilling by advocating to the Bahamian government that it should deny BPC any authorisations necessary to begin exploratory drilling.”

Warning that any oil pollution from BPC’s drilling could affect Florida and the east coast, the letter added: “A spill in Bahamian waters could quickly damage vibrant corals, kill off seagrass beds, and coat important mangrove ecosystems, which are important carbon sinks.....

“We understand that the Bahamian people rely on a clean and healthy coast, since tourism is an important economic driver. A 2014 study found that travel and tourism contributed more than 40 percent of The Bahamas’ GDP.”

The letter also called on The Bahamas to “learn” from the Deepwater Horizon tragedy, but its suggestion that BPC’s activities will take place only 150 miles from Florida appears inaccurate given that the first exploratory well - named Perseverance One - will be located some 100 miles south-west of Andros.

Nevertheless, Bahamian environmental activists have seized on the letter to bolster their case against the Government granting further approvals. Joe Darville, Save the Bays’ chairman, said. “If we rely on something as fragile as oil drilling we are setting ourselves and future generations up for catastrophe.”

Fred Smith, Save the Bays’ legal director, added: “In the absence of effective regulatory oversight it is environmental suicide to explore for oil in The Bahamas notwithstanding its possible economic benefits.”

Comments

Clamshell 2 years, 3 months ago

Neil Hartnell should be run out of the business for publishing this absurd puff piece on the very day when oil futures, for the first time in HISTORY, plunged into NEGATIVE territory. Shame on The Tribune. This story borders on criminal negligence!

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Clamshell 2 years, 3 months ago

As the BBC put it:

“James Cook @BBCJamesCook BREAKING With US oil prices in negative territory for the first time in history, and Brent Crude trading under $26 per barrel, industry body Oil and Gas UK has issued a dire warning about the sector’s future.”

Yeah, way to go, Neil — tell us again why this untested Bahamian oil exploration scheme is such a great investment.

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Bahama7 2 years, 3 months ago

Good article.

Many Bahamians still have their heads in the sand about the state of the economy.

The BPC drill may well save the economy from total ruin.

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Clamshell 2 years, 3 months ago

You should get out there and invest everything ya got in their stock. Do it now! Get in early, get rich!

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concerned799 2 years, 3 months ago

Oil sure helped out Venezuela to become a paradise right?

Newfoundland in Canada is now essentially bankrupt man years after finding oil. Oil is a curse!

Just look how "wonderful" is places like Nigeria. By contrast places with oil like Panama and Uruguay are much nicer and better off. I vote for the Bahamas being more like Panama and less like oil rich Venezuela!

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Porcupine 2 years, 3 months ago

Many Bahama7s still have their heads up their arses. How come we don't see you comment on anything else other than this death sentence for The Bahamas? A paid shill for the oil company. Great work Bahama7. Good article? Which part? The part about Florida reps voicing their opposition? Or the part about an oil spill. Given the stellar reputation of the oil industry, ALL Bahamians will be able to retire once Mr. Potter and his slippery crew find our black gold and share it with us.

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DDK 2 years, 3 months ago

Has anyone noticed how reliant we are on tourism? While most certainly not a good thing, why do we insist on killing the poor goose that used to lay golden eggs? Next we'll have mega cruise ships running into oil rigs in our formerly beautiful waters.

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TalRussell 2 years, 3 months ago

Could BPL customers be seeing as much as a Fifty percent drop in electricity bills?
A sign of new times where the price oil went from $60 barrel at beginning 2020 to running out storage tanks space forces Comrade Traders to just announced they are willing to pay others to take delivery barrels oil in May off their hands, so long as they also take the burden of figuring out where to keep it.

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Clamshell 2 years, 3 months ago

Won’t happen. In an earlier article a gov’t higher-up admitted that the Bahamas did not have the money to buy oil futures when the prices tanked. We missed the bargain. Your BPL bill gonna stay where it is — high.

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stislez 2 years, 3 months ago

Wealth over health never works! Word to the wise is sufficient.

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Leevmeebee21 2 years, 3 months ago

Vested interest(nimibys). tree huggers, never mind the down trodden springs to mind. Do they know what is happening in the areas around them. I hope the Bahamas government see through these single minded idiots and stick up the middle finger.

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Porcupine 2 years, 3 months ago

Could you be more specific? You mean the tree huggers who seem to be the only ones to take the health of our planet seriously?

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