Thursday, September 2, 2010

BPC Shares tumbled after the surprise announcement that the government was suspending consideration of exploration licences in The Bahamas

Govt's "no to oil" shock hits BPC shares
Guardian Business Editor

Shares in the company dedicated to drilling for oil in The Bahamas have tumbled after the surprise announcement that the government was suspending consideration of exploration licences.

BPC was due tomorrow to change its name to Bahamas Petroleum Company, and had expressed its desire to be listed on the BISX so that shares in the company could be sold domestically. BPC believes there could be as much as$12 billion in oil revenue underneath Bahamian waters waiting to be brought up, specifically in the area called Cay Sal Bank.

The company estimates that an oil industry could create around 15,000 jobs for The Bahamas, and to that end teamed up with Norwegian oil giant Statoil, insisting their partner had created the highest safety standard in the world for drilling, one which every other exploration would soon be forced to follow in the wake of the Gulf of Mexico spill.

But despite the assurance that The Bahamas had the'safest'company on board, the Minister for the Environment Dr. Earl Deveaux yesterday put on hold the exploration licence process, saying the government wanted to make sure it had a stringent set of environmental rules in place before it considered applications, and added it would also review all existing licences.

In the wake of that announcement shares in BPC, which owns five exploration licences in Bahamian waters to the east of Florida and Cuba, fell by 27 percent from 4.08 pence to 2.98 pence on the London Stock Exchange's Alternative Investment Market(AIM).

That took the estimated value of the company from$45 million to$39.4 million.

The move by The Bahamas follows the U.S. issue of a six-month ban on deepwater drilling in the Gulf of Mexico in July, after the explosion of a BP well caused the world's worst offshore oil accident.

BPC is reported to have said it would continue to analyse seismic data on its existing licences as it has not yet established a definitive drilling program.

A report on Reuters quoted the company as saying that drilling on BPC's Bahamian acreage did not face the same geological risks as those found in the Gulf of Mexico.

A spokesperson for Statoil told Reuters said the company was viewing the suspension as a"postponement".

BPC believes there could be multiple 500 million barrel fields in the 2.5 million acres it wants to explore.

Deveaux said yesterday: "The Ministry of the Environment has suspended consideration of all applications for oil exploration and drilling in the waters of The Bahamas. The ministry seeks, by this decision, to maintain and safeguard an unpolluted marine environment for The Bahamas notwithstanding the potential financial benefits of oil exploration.

"We are not seeking to interfere with any existing licenses and the people who have licenses know of the policy. The recent events showed us that(a)oil if it is to be found, will likely be in the marine environment and(b)we want to maintain an unpolluted environment.

"And so before we explore for oil we want to have the most stringent environmental protocols in place."