The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government yesterday said it had “refused” to provide the Bahamas Petroleum Company (BPC) with documentation confirming it was in full compliance with its licence terms and conditions, saying there were “outstanding” environmental issues that needed to be addressed.

Indicating that the company’s and Christie administration’s interpretation of his September 7, 2012, letter was vastly different, Kenred Dorsett, minister of the environment and housing, told Tribune Business the correspondence was intended to highlight issues the Government wanted resolved “for us to confirm full compliance with the licence terms”.

BPC’s reading of the letter was somewhat different, the company issuing a release to the London stock market stating that Mr Dorsett’s letter showed “it is, and has been, in full compliance with the terms of the signed oil exploration licences, the provisions of the Petroleum Act, and the Petroleum Regulations of the Bahamas”.

But, at pains to point out that his letter was not an approval for oil exploration in Bahamian waters, Mr Dorsett said BPC had yet to comply with several licence requirements as it related to concerns/recommendations expressed by the Bahamas Environment, Science and Technology (BEST) Commission.

“We’ve issued a letter to them indicating what remains outstanding in relation to compliance,” was Mr Dorsett’s take to Tribune Business.

Adding that BEST had “raised certain issues” relating to BPC’s Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) for its first proposed exploratory well in Bahamian waters, Mr Dorsett added: “They [the company] were asked to review certain things in what they submitted, and provide additional submissions on other issues.

“The letter we issued to them indicates that while they have met the financial terms of the five licences, and met a significant portion of the terms under their licences, there are certain unresolved items relating to their EIA and EMP.”

According to Mr Dorsett’s letter, which has been seen by Tribune Business, BEST communicated several EIA-related recommendations to BPC on February 20,2012.

These were a request for “detailed information on the subsurface conditions at the proposed well site”, including the use of surveys by a remotely-operated vehicle, plus an analysis of “likely and worst case scenarios” unless well pressure could be confirmed.

The other two, out of four BEST recommendations, were a request for information on whether a platform or vessel would drill the well, and “information on the sanitary and waste management discharge”, plus a plan to protect underwater telecommunications cables in the area.

Mr Dorsett added in the letter, sent to Jo-Beth Coleby, BPC’s in-house counsel: “We advise that Bahamas Offshore Petroleum and Island Offshore Petroleum have paid the agreed fees under the signed oil exploration licences, and have complied with the additional terms thereof, the Petroleum Act and Regulations of the Bahamas, save and except certain requirements provided for under Clause 31 (1), (2) and (3) of the licences.”

Simon Potter, BPC’s chief executive, yesterday said the company would be working to meet BEST’s concerns.

In BPC’s statement to the market, he added of the Government’s letter: “It is a positive step which assures the integrity of the licence area.

“It enables us to schedule exploratory drilling to avoid the 2013 hurricane season, and ensures sufficient time to plan and execute the safest well possible without breaching the terms of the second phase of the licence agreement.”

Yet Mr Dorsett reiterated to Tribune Business: “BPC had asked us to provide them with proof [of full licence compliance] from a letter, but that was not something my ministry was not prepared to issue, as there were a number of outstanding issues.

“We sent them a letter indicating what remains outstanding, what needs to be resolved, and all of that is subject to a referendum.”

The differing interpretations of BPC and the Government will likely only cause more confusion for the company’s shareholders and the markets, potentially further depressing its share price.

The BEST recommendations, though, are not major impediments for BPC and full licence compliance, and the issue is likely to be resolved successfully.