The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Oil exploration opponents yesterday voiced fears that a Cabinet minister’s statement on outstanding fees “leaves the door open” for licence renewals if these sums are paid.

Rashema Ingraham, executive director of Waterkeepers Bahamas, one of two environmental groups behind the ongoing Judicial Review challenge to the former Bahamas Petroleum Company’s (BPC) permits and approvals, told Tribune Business she was “not completely satisfied” with the position identified by Romauld Ferreira, minister of the environment.

The minister, who could not be reached for comment yesterday, said on Wednesday that the government would not even consider the renamed Challenger Energy Group’s application to renew its four southern Bahamas exploration licences for a further three years - with an obligation to drill another exploratory well in Bahamian territorial waters - until the outstanding fees were paid.

Mr Ferreira asserted that Challenger had not paid its seabed lease fees since 2017, a sum that had reached to over $1.9m as of last year, with another $1m already owed for this year to-date.

Ms Ingraham, though, argued that the minister’s statement on the government’s willingness to renew Challenger’s licences was open to interpretation, and could be viewed as saying the application will be considered “if licence fees are brought up-to-date”.

She told this newspaper: “It leaves the door open. Behind the door are issues we are living with every day. We’re living with the fact that The Bahamas is a nation sensitive to climate change, and we’re feeling the effects.

“We’re in the position of being a developing and looking for ways to regenerate our economy, not only as oil stocks plummet and fall, but as the rest of the world is moving away from oil or big oil into renewable energy and major financial institutions say they are no longer investing in oil. We’re taking a big risk.”

Ms Ingraham added that the government should “use this opportunity to do two good things”, namely protect the tourism and fisheries industries by imposing “a permanent ban on oil drilling in Bahamian waters”.

She was backed by Casuarina McKinney-Lambert, the Bahamas Reef Environment Educational Foundation’s (BREEF) executive director, who branded Challenger’s licence fee arrears as “a serious red flag questioning their ability or willingness to pay in the event of a disaster”.

“We would like to see an accounting of the licence fees that have been paid and what is still outstanding,” she said. “This seems to be very unclear. I understand that the company also has outstanding payments due to the drilling company, Stena, and one of the funding sources in addition to the licence fees owed to The Bahamas.”

Tribune Business revealed in January that the Government had refused to accept then-BPC’s payment of outstanding licence fees. Carl Bethel QC, the attorney general, disclosed to Tribune Business then that the two parties were now engaged in a “reconciliation process” to resolve the dispute over how much the oil explorer owes to the Public Treasury.

“They’ve sent the money, sent a cheque, but we’ve not accepted it,” he said in response to this newspaper’s inquiries. “They’ve tendered what they say the amount is, but we don’t agree. We’re now engaged in discussions that we call a ‘reconciliation’.

“I inquired of my senior officials and am informed that there remains a difference of opinion. BPC has tendered what it says are the outstanding licence fees. The parties have now embarked on a ‘reconciliation’ process in an effort to settle the dispute.”

Documents seen by Tribune Business reveal that BPC’s outstanding licence fees, some of which date back to before 2018, were supposed to be determined, settled and paid by end-April 2020 - almost eight months before it began drilling its exploratory Perseverance One well in waters some 90 miles west of Andros.

Mr Ferreira, in the February 25, 2020, letter that granted BPC the Environmental Authorisation (EA) approval that is now the subject of environmental activists’ Judicial Review challenge, laid out the timetable for resolving the issue.

“Finally, within 30 days of the date hereof, BPC and the ministry shall enter into a side letter agreement in relation to any outstanding licence fees up to the end of 2018, having regard to any reconciliation of payments that might be necessary,” stated the letter, which was signed by both Mr Ferreira and Simon Potter, BPC’s chief executive.

“Within 60 days of the date hereof, BPC shall pay to the ministry any and all outstanding licence fees (if any) for the period up to 2018 and, in addition, shall pay any licence fees as determined by the minister for the periods 2019 and 2020.” The EA letter did not explicitly tie the Government’s Perseverance One approval to payment of these licence fees.

Simon Potter, BPC’s then-chief executive, responded at the time by saying opponents are “seeking to make mountains out of molehills by misrepresenting what are basic business matters and practices”.

He added: “BPC has held its licences in The Bahamas since 2007, and has paid licence fees to the Government since that time, which in aggregate amount to millions of dollars. As is the case in any business setting, there is a normal process whereby fees payable by BPC to Government are checked, reconciled and audited for correctness - most especially for a publicly-listed company such as BPC, where such payments have to be clearly and transparently accounted for.”

Mr Potter continued: “Given the various extensions to the licences agreed with the Government, including most recently as a result of force majeure occasioned by the COVID-19 pandemic, a comparatively minor amount of licence fees remains outstanding.

“As the attorney general has correctly acknowledged, the exact amount remains to be to be finally checked and reconciled between the Government and BPC. Again, as the attorney general has acknowledged, during 2020 BPC had offered to pay an amount to the Government in advance pending this final reconciliation, but the Government’s preference was to complete the final reconciliation first, and BPC is currently engaged with the Government in that process.

“This is a basic, auditable business practice and, as noted, the amount involved is relatively minor in the context of more than a decade of substantial licence fee payments by BPC to the Government.”