The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government should allow the Bahamas Petroleum Company (BPC) to drill an exploratory well to determine if commercial quantities of oil exist in this nation’s waters prior to putting the issue to a referendum, a senior private sector official said yesterday.

Thomas Sands, president of the Eleuthera Chamber of Commerce, told Tribune Business it would also be important for the Government to clearly indicate how revenue derived from oil exploration would be used.

Executives of the Bahamas Petroleum Company (BPC) gave a presentation to the Eleuthera Chamber of Commerce last month, and Mr Sands said: “One thing that is clear to me is that they have done research which indicates the presence of oil in the Bahamas.

“Apparently, what needs to happen, the next step, is drilling a test well to determine if there is a reservoir. Having signs of oil in the rock doesn’t mean you have any quantity of oil beneath you. If the Bahamian population is going to decide that we are going down this road, it needs to be determined if there is an oil reservoir.

“Without that having taken place I think we would be wasting our time. I understand from them that all the data indicates a probability that there is oil there. My individual thought and advice would be to allow them to drill and determine what is there, what quantities are there, prior to bringing it to the people.”

Mr Sands said a successful oil discovery could immediately help alleviate some of the Bahamas’ fiscal woes. “I think that it is a potential source of revenue for the country that could immediately, given that it is there, eliminate some challenges,” he said.

“I am concerned about how the revenue from it would be governed. There are many countries where the money was mismanaged. There are models out there where the money was squandered, and models out there that are examples of how this thing has been managed properly. We need to look at those and see how it was done.

“I understand that the Bahamas government has royalties ranging from 10-20 per cent, which we understand is a very good rate in comparison to other jurisdictions, so it has positioned itself well in reference to that.

“I think it is important to understand where the revenue would go before Bahamians make a decision. A point was also raised that after the oil is gone and you have established these expectations from your population, you have to have had built something in the interim, another industry to keep yourself going,” said Mr Sands.

Bahamas Petroleum Company (BPC), the London-listed firm, has been patiently seeking government approval to conduct its own exploration activities in the five licence areas it holds in Bahamian waters. Kenred Dorsett, minister of the environment and housing, had told Tribune Business previously that the Government will not permit BPC to drill an exploratory oil well prior to a referendum, noting that he was aiming “to advance” a regulatory regime for the industry by the 2013 first quarter.