By NEIL HARTNELL
Tribune Business Editor
The Bahamas Petroleum Company’s (BPC) outgoing chief executive yesterday blasted as “spurious” a legal analysis arguing that the government is not legally bound to renew the oil explorer’s licences.
Simon Potter, who steps down from his post on May 27 but will remain on BPC’s board, blasted a letter submitted to the Prime Minister by the Earthjustice environmental organisation on the basis that it has “no knowledge, no insight and certainly no experience or expertise” on the subject.
And he used Earthjustice’s analysis to challenge assertions by Bahamian and foreign environmental activists that BPC’s licences, and the process by which they were approved, lack transparency given that the former group had no problem seemingly in accessing the documents for its letter.
“Environmentalists have repeatedly complained that the confidential licence documents between BPC and the Government of The Bahamas have never been published. Now these same environmentalists appear able to comment in detail on their contents and their applicability. Well, which is it?,” Mr Potter asked.
“The simple fact is that the Government of The Bahamas awarded hydrocarbon exploration licences to BPC in 2007. Since that time, those licences have been extended and renewed on various occasions by administrations of each political persuasion, in accordance with their terms, in reliance of which BPC has expended over $150m in safe and responsible activities honouring its obligations under those licences.
“The licensing regime in The Bahamas is no different to that in place in many other advanced economies, a core component being the notion that energy companies agree to assume considerable financial risk - whilst host governments do not - in the clear expectation that licence rights, once granted, will be respected,” he added.
“If this were not the case, and if the integrity of agreements could not be relied upon, then companies would never invest such huge volumes of capital, let alone explore for resources to enrich a nation’s economy, with a resource that take decades to create a return on that company’s investment.
“It is thus entirely spurious for foreign environmental groups to offer unsolicited ‘legal advice’ on a matter of which they have no background, no knowledge, no insight and certainly no experience or expertise.”
Mr Potter hit out after Steve Mashuda, managing attorney for Earthjustice, told Dr Hubert Minnis in a May 13, 2021, letter its analysis suggests that neither the Petroleum Act nor BPC’s existing licences impose a legal obligation on the government that it must extend them into a third three-year term.
“Based on these available authorities, we conclude that the Government of The Bahamas has broad discretion under the law to deny BPC’s request for renewal of its licenses and that BPC has no right of renewal,” he wrote.
“In addition, such denial is not only within the lawful authority of The Bahamas, but it is also consistent with the Government of The Bahamas’ public opposition to offshore drilling activities as well as its nationally determined commitments under the Paris Agreement.”
Mr Mashuda argued that while BPC’s first licence renewal in 2012 was non-discretionary, provided that it met certain conditions, later renewals are entirely at the Government’s choice based on paragraph 43 of the oil explorer’s 2007 licence agreement.
That paragraph provides for two further renewals for periods of no more than three years, with the area covered by the licences to reduce by 50 percent each time. BPC is now seeking the first of these two renewals.
“This discretion is reiterated through the Petroleum Act,” Mr Mashuda said, “where ‘[t]he term for which a licence may be further renewed by the minister, shall not exceed a period of three years’.
“The Petroleum Regulations further reaffirm this discretion, using language similar to the 2007 licence agreement, when referring to a request for a second renewal: ‘and thereafter may, in his discretion, renew for two successive periods each not exceeding three years as to fifty per centum of the licensed area’.
“Neither the licence itself, nor the subsequently enacted provisions of the Petroleum Act and its regulations, place any limitations on the minister’s discretion to deny a subsequent renewal. Additionally, we evaluated the Minister’s discretion to consider either a general extension or an extension due to force majeure. In both cases, we similarly concluded that the minister retains the discretion to deny both requests.”
The Earthjustice conclusions, if accurate, potentially place more pressure on the Prime Minister and his Cabinet to live up to their publicly stated opposition to oil drilling in Bahamian waters by rejecting BPC’s licence renewal request. Dr Minnis and his Cabinet have repeatedly said they were bound by a legally watertight agreement to let BPC drill its Perseverance One exploratory well.
Casuarina McKinney-Lambert, the Bahamas Reef Environment Educational Foundation (BREEF) executive director, and one of the principals behind the Our Islands, Our Future coalition that has led opposition and the legal challenge to BPC’s exploratory drilling, yesterday defended Earthjustice as “a highly respected non-profit environmental law organisation”
“The potential for future oil drilling in The Bahamas is an issue that has regional and global ramifications, as well as posing a huge potential risk to The Bahamas,” she responded. “Earthjustice’s analysis comes at a critical time and it will hopefully be helpful in the discussions that the attorney general (Carl Bethel) says are currently underway regarding the licence renewal requests.
“There are numerous reasons why The Bahamas should choose to step away from embarking on a new industry of oil drilling, and Earthjustice’s analysis seems to indicate that the Government has the full legal authority to deny BPC’s request for a licence renewal. Putting an end to the threat of oil drilling in our waters will help safeguard our environment and economy for generations to come.”