The government has rejected the Bahamas Petroleum Company’s (BPC) bid to renew its drilling licenses and returned nearly $300,000 in “rental fees”.
The sudden statement from the Ministry of the Environment yesterday morning contradicts the recent announcement made by BPC on its website that all five licenses have been renewed.
“Upon receipt of legal advice, this ministry advised BPC that it is presently unable to accept rental fees for the year April 2012-2013, as the government has yet to determine its course of action in connection with the license renewal,” the statement said.
According to BPC’s website, its licenses were renewed on April 27. It further stated that it was committed to drilling an exploratory well in Bahamian waters by no later than April of next year.
“The current exploration licenses are in their second (of four) renewal period,” the company said. “Under the terms of the renewal, which became effective on April 27, 2012, the company has committed to spud an exploration well by April 26, 2013.”
BPC did not respond to requests for comment.
The contradictory messages cast the prospect of oil drilling into further doubt and stokes an already burning issue. Oil drilling has featured prominently in the political rhetoric and national dialogue leading into the election on Monday.
Winston Rolle, the CEO of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), said the recent decision by the government could provide an opportunity for the country to sit back and consider the topic with fresh eyes.
Oil drilling has become a “political football”, he added, and waiting until after the election is over may help separate it from election fever.
He expressed regret, however, that BPC and the issue of oil drilling has been “battered around” in front of the international community.
“It is very unfortunate,” he told Guardian Business. “This is an international traded company. There are a number of investors that might be asking if this is how business is conducted in The Bahamas.”
While not wishing to speculate on the finer points of the license, he felt the provision that BPC must drill an exploratory well next year was likely a backbreaker in the renewal process.
Sources close to the matter told Guardian Business each license was worth $57,000, with five licenses adding up to nearly $300,000.
This latest twist in the BPC saga comes two weeks after Prime Minister Hubert Ingraham declared that his administration would not pursue oil drilling in The Bahamas. He later said he would consider drilling based on certain conditions.
The issue once more entered the political arena when Perry Christie, the leader of the opposition, admitted that he had provide legal advice to the oil firm through Davis & Co., a law firm run by Progressive Liberal Party (PLP) Deputy Leader Philip Brave Davis.
BPC insisted that it has “significant exceeded” the commitments and obligations entitling it to a license renewal. This criteria included seismic testing and performing an environmental impact assessment.
BPC said it has so far invested more than $50 million in the project.
Prior to the statement by the government, shares on the London Stock Exchange (LSE) ended the day up 18 percent, finishing at 8.90 pence per share from an opening price of 7.75 pence.