The Tribune

• QC: BPC will benefit from regulatory clarity too

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent QC yesterday argued that Bahamas Petroleum Company (BPC) will itself benefit from the legal challenge to its permits being cleared to proceed to a full Supreme Court trial.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the outcome of the Judicial Review action launched by his environmental activist clients will aid the oil explorer in its search for joint venture partners by clarifying precisely what approvals are required for any future exploratory wells drilled in Bahamian waters. 

He spoke out after this newspaper learned BPC has dropped its opposition to allowing Save the Bays and Waterkeepers Bahamas extra time to set-up the bank account that will hold the $200,000 “security for costs”, which will cover the oil explorer’s legal fees if the activists are unsuccessful as ordered by the Supreme Court.

BPC and its attorneys, Graham, Thompson & Company, had initially proven uncooperative in extending the March 30, 2021, deadline for the $200,000 facility to be in place even though the activists had raised the necessary funds in time, but Mr Smith yesterday confirmed they had relented and reversed their stance.

“The [activist] coalition and BPC are working at setting up a joint account for the $200,000 security for costs, and hopefully when that is done - it takes time, unfortunately because it’s very difficult to conduct business in a rationale way in The Bahamas - we will be able to go on with the trial when we convene for the parties to go back before the court and ask for directions,” Mr Smith said.

BPC’s revised position has both eliminated the need for a Supreme Court hearing on whether to grant Mr Smith’s clients extra time to put the “security for costs” facility in place, and removed all potential obstacles to a trial on the merits and substantive issues raised by their Judicial Review challenge.

Mr Smith yesterday argued that it was “extremely important” that the Supreme Court determine whether the Government had followed its own approval processes, and if BPC obtained all the required permits, even though drilling for the latter’s Perseverance One exploratory well had concluded in mid-February with no commercial oil quantities discovered.

With the oil explorer having indicated it will apply to extend its four southern Bahamas exploration licences for another three-year term, with plans to seek a joint venture partner and drill a second exploratory well in Bahamian waters, he added that it was critical to clarify the regulatory regime for all interested parties - BPC and its potential partner; the Government; other oil explorers; and the public.

“The trial of this Judicial Review remains extremely important even though they [BPC] have finished drilling because it will settle the law on what are the obligations of the Government and oil explorers to be transparent in their dealings with the public, what laws and regulations do in fact apply, and what permits oil explorers at every stage must lawfully obtain,” Mr Smith said.

“Given the continued expressed intent of BPC and possibly others - we just don’t know because the Government’s information base is locked in a Fort Knox-obsessive mindset - to continue drilling for oil, and the value of our environment and the fact it is a limited resource that can be destroyed in many different ways and different locations overnight, the outcome of this trial will provide a foundational basis for oil exploration permitting going forward.”

Mr Smith said among the issues that the Supreme Court needs to determine are whether exploratory oil wells require site plan approval under the Planning and Subdivisions Act; if they also need excavation permits under the Conservation and Protection of the Physical Landscape of The Bahamas Act; and the application of local laws and international treaties to prevent pollution at sea.

He added that other issues included whether the newly-enacted Environmental Planning and Protection Act applies to exploratory oil wells, or if it is just the Petroleum Act and accompanying regulations. “There’s a whole slew of laws and regulations that the court needs to pronounce on,” the outspoken QC told this newspaper.

“The benefit of a Judicial Review is that it clarifies the law for the Government, the developer, civil society and the public, and that’s why these actions are not supposed to descend into trench warfare on procedural issues. Again and again the courts have said to move quickly to deal with the merits as they are matters in which everybody benefits from judicial clarification of the law.

“There is no sense in stringing this case out for four to five years while other exploration is going on. Otherwise it becomes fraught with extremely high costs and obstruction which is to the detriment of developers and the public. It baffles me why the Government always digs its heels in and tries to prevent the quick determination by the courts dealing with Judicial Reviews.”

Mr Smith argued that BPC, and its plans to secure a joint venture partner for a second exploratory well, would also benefit from the Supreme Court providing regulatory clarity. “Investors would generally prefer to know what the law is rather than have constant Judicial Review challenges over whether there was public consultation or not, and whether this or that Act applies or not,” he said.

“It only creates confusion and chaos in the investor environment. Investors don’t want to come here and be sued. They want to come here and do business. Judicial Reviews provide a very effective mechanism for helping the investment climate if not resisted so prematurely.”

Simon Potter, BPC’s chief executive, recently said the company’s total spend on its activities in The Bahamas had hit $150m as he affirmed its continuing interest in this nation and plan to apply for a renewal of its licences into a third exploration period.

The renewal application, for licences that are set to expire at end-June, was supposed to be submitted by end-March 2021 although the Government has yet to confirm whether it has received such submissions.

A successful renewal will give BPC the chance to earn a return on its $150m investment by “monetising” the value of these licences through securing a joint venture or farm-in partner. Its recent pronouncements have indicated it will only drill a second exploratory well in The Bahamas if it secures such a partner to share the technical, financial and operational risk.