A political blog about Bahamian politics in The Bahamas, Bahamian Politicans - and the entire Bahamas political lot. Bahamian Blogger Dennis Dames keeps you updated on the political news and views throughout the islands of The Bahamas without fear or favor. Bahamian Politicians and the Bahamian Political Arena: Updates one Post at a time on Bahamas Politics and Bahamas Politicans; and their local, regional and international policies and perspectives.
Showing posts with label oil Bahamas. Show all posts
Showing posts with label oil Bahamas. Show all posts
Saturday, January 23, 2021
Wednesday, December 23, 2020
Oil, Oil Drilling, Oil Royalty, Oil Royalties and Oil Madness with the Grimpen Reprobates and Greed-lusting Lunatics in The Bahamas
PROFESSOR GILBERT MORRIS ON BAHAMAS’ POOR CONCEPT OF NEGOTIATION:
IN TODAY’S PAPER, the Attorney General of the Bahamas intones that “if they find oil” we’ll negotiate a royalty!
Every hedge fund manager, investment banker, every bond investor, and investment grade insurance broker spilled his coffee at those petulant words. Every first year student in finance or graduate student in a negotiation or mediation seminar knows this statement goes against every basic rule of negotiation or even business strategy.
Here is the context any strategist sees immediately:
1. You (THE BAHAMAS) allows a no name company that’s no where near the best-of-brand to travel around the world flogging the name of the Bahamas in some ‘hustle and flow’, selling their eyelashes and toenails to raise money for what purpose? TO DRILL in the Bahamas...HEAR ME NOW: THE BAHAMAS!
2. This name (BAHAMAS) that evokes natural wonder GLOBALLY; a luxury brand that the world saves-it’s-money in hopes to enter and engage...you allow this BRAND to be flogged in every slopbucket across the globe...altering IMMEDIATELY 120 years of branding.
3. Just to emphasise: It’s not as if this company moved around saying “Hey man, this process is like we are exhibiting at the Louvre or in the Vatican. THEY ARE NOT HAVING TO SAY: this is the Bahamas. We have strict rules on who can participate in this deal, even stricter rules on how we mention the Bahamas’ name and still stricter rules on the methods: in fact, we have to work with the best engineers in the world and the leading environmental scientists...basically inventing a new concept and method for even preliminary exploration and it has to go before a global panel of experts and the science has to show a “Saudi Reserve level motherload” of potential oil”, with forward contracts for sales of $100 billion in 10 years”.
This is the language and pressure ANYONE WHO GAINS THE CONCESSION TO DRILL IN THE EARTH’s MOST PRISTINE ENVIRONMENT SHOULD SPEAK AND FEEL. This raises a question: WHERE IS THE SCIENCE? The science and engineering methodology that allows a company to DRILL IN THE BAHAMAS should be of a quality to win the Nobel Prize! It should have tongues wagging about a NEW BAHAMIAN SCIENTIFIC STANDARD! Where is the science?
4. The fact that the company does NOT have to speak in this manner and the fact that they NOW KNOW, gaining a concession to drill in the Bahamas is little different from selling fake hair, IT IS THEY who gained confidence in this affair?
THEY GREW FROM NOTHING TO SOMETHING!
THE BAHAMAS GAINED NOTHING: we didn’t set a new deal standard, we didn’t layout new green criteria...NOTHING! Instead this process shows any hustler can gain access to the world’s most pristine environment because we, to whom God granted stewardship, are low-information fools, who would sell our children’s tongues for disposable shiny objects!
5. Negotiations depend on leverage: so if this company knows we are so clueless, backward and morally vulgar toward our birthright, that we put them under ZERO PRESSURE to violate a 120 year old hospitality brand, under zero pressure to INVENT some new process for this privilege to drill in our environment, then we’ve lost already! UTTERLY!
6. What the AG’s apocalyptically dissonant statement says is this: WE permitted a nothing company a concession to VIOLATE the tranquility of our NATURAL LANDSCAPE THAT WE DIDNT CREATE AND CANT REPLACE, which the entire world envies, and now that they have this concession and USED THE NAME AND PRESTIGE OF THE BAHAMAS to gain notice in the world - FOR NOTHING - we will wait until they discover the two cups of dirty dishwater under OUR PRISTINE OCEAN FLOOR...then when that company goes from nothing to making an oil find in THE BAHAMAS...and once they HAVE ALL THE POWER AND LEVERAGE in the deal structure...we, THE BAHAMAS will negotiate a royalty!!!!!!
Are we smoking the hair of our armpits?
7. This telegraphs to the entire world that we are not just clueless to have allowed this TREASONOUS ASSAULT ON OUR ENVIRONMENT, but we have not even a basic clue how deal-structure functions. This leads to another question: WHERE IS THE DEAL STRUCTURE, BENCHMARKS, HURDLE PROPOSITIONS AND SPILL INSURANCE EQUAL TO THE RARE ENVIRONMENT THAT’s BEING PUT AT RISK? WHERE IS IT?
9. But here is the ‘coup d’ grace’, any deal specialist knows already the investment begging company can’t monetise any oil find. As such, they likely would have to flip it to a major oil company if they find anything. Given that the world is awash in cheap oil, and with major new oils finds in Russia, Brazil and with Iran set to come online forcing global prices lower, they would cap those wells in the Bahamas and we get NOTHING! NOTHING! NOTHING....as usual!
10. BUT the world knows now that we are grimpen reprobates and greed-lusting lunatics, who would sell a priceless irreplaceable environment - with a 120 year global profile - for NOTHING, ignoring our competitive advantages in new hospitality models, for a dying industry in which we have zero and would have zero influence!
Thursday, April 4, 2013
Perry Christie’s lack of transparency on certain issues is as murky and as dense as an oil slick... ...When did he become a consultant to Bahamas Petroleum Company (BPC)? ...How much was he paid? ...How often did they consult with him?
Perry Christie’s oil slick
Front Porch
BY SIMON
Referring to their twin island-nation’s oil wealth, some Trinidadians and Tobagonians liked to brag, “oil don’t spoil”. It may not spoil in the ground. But the potential to spoil rotten, some politicians, public officials and others is legend.
Speaking ahead of the gambling referendum in January, Bahamas Faith Ministries International President Dr. Myles Munroe sounded this dire warning: “Any government pressured by a small lobby group such as the gaming bosses will inevitably produce corruption. And if this referendum goes through we will never have a pure government again.”
Bahamaislandsinfo.com further reported: “He [Dr. Munroe] also stated that the motivation of the referendum of the governing authority seems to be the surrender to the powers with money. In other words he said that the government cannot rightly govern because they will owe allegiance to the few and not to the citizenry or the people of The Bahamas.”
The pastor’s warning is noteworthy. The nature and role of leadership have been central themes of Dr. Munroe’s ministry. The quality of leadership at various levels of society will be pivotal in the debate on oil exploration.
For its part, the Bahamas Christian Council has gotten off to a poor start. The council’s economic committee chairman Rev. Patrick Paul specified the type of arrangement he thought best to distribute the proceeds of oil wealth, calling a supposed arrangement “categorically unjust, injurious and unfair to the democracy of our nation”.
God bless Paul. But, he seems like a potential groom planning for a joint bank account and mortgage with a woman whom he hasn’t even asked to marry him. The reverend has gotten things in the wrong order.
A prior question is whether there should be drilling in the first place, which is what then Opposition Leader Perry Christie solemnly promised the Bahamian people his government would ask in a referendum. He has spectacularly reneged on his promise.
Calculated flip-flop
Christie’s latest calculated flip-flop clarifies the quality of political leadership the country needs in considering oil exploration. Good governance and good leadership on this issue will require leaders of great prudence and profound judgement.
Christie has exhibited a stunning lack of prudence and extremely poor judgement on the matter of oil exploration. With the disclosure of his work for Bahamas Petroleum Company (BPC), Christie, seemingly caught off guard, listed some of his duties as a consultant for the company.
“If there is an issue they need advice on, whether or not they need someone to speak to the issue of environmental impact [studies], the issue of whether or not in my judgment a matter is worthy for the government to approve, whether or not an application is ready, whether or not they should employ and who go on the board of directors, whatever views they ask of the firm regards it as necessary, they would consult me on it. Those are the services I provide,” he said.
This is more than the work of an attorney. His duties appear political and operational. He would be considered a lobbyist in some jurisdictions. Further, what did he mean by, “whether or not in my judgment a matter is worthy for the government to approve”?
If there are clear guidelines, it is not up to anyone’s judgment, including Christie’s, as to whether a matter “is worthy for the government to approve”. Such murkiness is worrisome in what should be a highly regulated field. Is Christie also following this approach as prime minister?
During last year’s general election campaign, former Prime Minister Hubert Ingraham noted: “When Mr. Christie agreed to become a consultant for the company [BPC] it would have been with the full knowledge and intention of using his position, past and present, and his access to government agencies, whether as government or as former government, to influence a decision by the Bahamian government with respect to any application by that company.”
Stringent guidelines
In quite a number of democracies there are stringent guidelines to limit the revolving door and conflicts of interest of politicians and public officials moving in and out of government, potentially using their public positions to benefit private clients. One key measure includes a waiting period before one can work as a consultant or lobbyist for various clients.
Christie’s revolving door seems like a turbocharged merry-go-round: Between 2002 and 2007, his government issued certain licences to BPC. Out of office he became a consultant to BPC. Now back in office, his government has issued an exploration license to BPC, while delaying his promise to hold a referendum on oil drilling.
Christie’s lack of transparency on certain issues is as murky and as dense as an oil slick. When did he become a consultant to BPC? How much was he paid? How often did they consult with him?
In addition to the prime minister, neither Deputy Prime Minister Philip Davis, whose law firm represented BPC, nor Senator Jerome Gomez have been transparent or forthcoming with their compensation terms and arrangements with BPC.
By his own admission, Christie was a general consultant to a corporation wanting to drill for oil in The Bahamas while he was in Parliament, while he held the position of leader of the opposition, and while he fully expected to again become prime minister.
Further, did Christie express that he expected to be paid handsomely for his advice? And, how handsomely was he paid. The Bahamian people have a need to know?
Essentially, Christie advised his clients on how to go about achieving their ultimate objective – which is to drill for oil in The Bahamas. And it was not just legal advice, it was advice on environmental issues, preparation for government approval, who to employ, who to put on the board of directors, and a catchall “whatever views they ask of the firm”.
In light of all of this, we are expected to believe that the prime minister has an open mind on whether or not there should be oil drilling in The Bahamas?
Christie’s clients were not some ordinary citizens requiring legal counsel who may have had sometime in the future a matter before the government of The Bahamas. These were a corporation whose sole purpose for being in the country is to drill for oil. Even if he did not become prime minister, as leader of the opposition, Christie knew that at some point he would have to address this issue in Parliament.
Christie himself must have recognized the position he was in when he and his government decided not to proceed with the promised referendum but to give the company the right to drill anyway.
Why on such a momentous national issue and stunning flip-flop did he not make the statement himself but left it to his minister for the environment? Christie continues to abuse our trust. And, he is more interested in putting the needs of foreigners first, instead of the Bahamian people.
By his own actions and admission, the prime minister has demonstrated that he and his government cannot be trusted on the momentous question of oil drilling. His revolving door and flip-flopping constitute an oil slick that grows bigger and continues to spread.
• frontporchguardian@gmail.com, www.bahamapundit.com
April 04, 2013
Thursday, March 22, 2012
...the Democratic National Alliance (DNA) has tried to gain political mileage by stirring up a controversy over oil exploration in The Bahamas
Oil drilling in the Bahamas - the facts behind the scares
By LARRY SMITH:
IN RECENT weeks, the Democratic National Alliance has tried to gain political mileage by stirring up a controversy over oil exploration. But rather than focus on the very real substantive issues in a constructive way, they chose to launch a series of personal attacks and conspiracy charges.
In view of the enormous international pressures and revenues that can be expected, together with the dramatic changes to our way of life that are implicit in future oil production, not to mention the incredible pollution risks, it is worth taking a closer look at this issue - particularly in the context of the accusations of cover-ups and carve-ups.
Our original petroleum act was passed in 1945 to facilitate exploration by Gulf Oil, Standard Oil, Superior Oil and Shell. It was replaced by legislation enacted by the Pindling government in 1971, which came into effect seven years later and remains in force today.
The last exploratory well was drilled here in 1986 by a company called Tenneco, and while no commercial production followed from those early explorations, there were oil shows and most experts are convinced that large quantities of petroleum lie beneath our seabed.
The Christie government awarded a British group (later constituted as the Bahamas Petroleum Company) five new exploration licenses for just under four million acres in 2006. The licenses became effective just before the last general election in April 2007, when they were signed by the governor-general. And for the past several years, BPC has been conducting geophysical research in the Bahamas.
Now BPC says it is preparing to conduct appraisal drilling south of Andros, and the DNA thinks this amounts to a conspiracy involving secret deals. The party has set up a Facebook petition on oil exploration, asking Bahamians to sign "If you think we should control our resources to benefit all Bahamians, so we can demand answers before it's too late".
From the commentary it has made, the DNA is clearly not opposed to drilling, but is simply trying to stir the pot. This is not necessarily a bad thing, but it depends on how it is done. Accuracy and honesty are important when making public statements on complex issues. Publishing false statements and facilitating wild allegations will lead to a rapid loss of credibility.
For example, according to the DNA, "this government negotiated a 12.5 per cent (royalty), one of the worst in any country". In fact, it was the Pindling government - back in 1971 - that set a then industry-standard minimum royalty rate of 12.5 per cent "of the selling value at the well-head of the petroleum won and saved from the licensed or leased area".
And, contrary to what the DNA now alleges, the licenses awarded to the Isle of Man-based Bahamas Petroleum Company in 2007, set a sliding scale of 12.5 to 25 per cent of production value, a fact which BPC clearly shows on its website.
Those licenses were never renewed, because the government imposed a moratorium on oil exploration in 2008, while efforts were made to pin down precise maritime boundaries with Cuba, the US and the UK/Turks & Caicos Islands. The boundary with Cuba - where four of the BPC licenses are located - was finalised last October.
In 2010 - following the catastrophic Gulf of Mexico oil spill - the government decided to step back and review the entire petroleum policy framework before allowing exploration to resume. The Ministry of the Environment also required all license holders and new applicants to produce environmental impact assessments for the areas they wished to explore.
There are currently seven approved licenses for oil exploration in Bahamian waters, and 10 applications for new licenses have been submitted since 2008. Five of the approved licenses are held by BPC. The other two are held by Liberty Oil, but were suspended because of the company's failure to remove a sunken vessel from an Abaco reef.
A US company called NPT Oil has applied for seven licenses covering more than six million acres north of Grand Bahama. NPT's Bahamian data and assets were recently acquired by Pennine Petroleum Corporation, an emerging oil and gas exploration and development company active in Alberta and Saskatchewan.
A Canadian geophysicist named Allan Spector has applied for an onshore license near Seymours on north Long Island. And a partnership between BPC and the Norwegian company Statoil has applied for three licenses covering more than 2.3 million acres near the Cay Sal bank.
DNA Montagu candidate Ben Albury - who has led the party's campaign on this issue - says he is simply demanding transparency and information. But he has also accused Environment Minister Earl Deveaux of gross malfeasance, without any evidence, and has succeeded in making the issue more opaque, rather than clearer, for the average Bahamian.
"My main issue," he told me over the weekend, "is the dodging of the questions by Deveaux. If you listen to his comments, he makes it sound as if there is a moratorium on oil exploration, (but) BPC is telling the media that they intend to drill in the coming months."
Albury cites a Miami Herald article published last October, in which Dr Paul Gucwa, BPC's chief operating officer, refers to plans for an exploratory well by the end of this year. "The Bahamian government has a moratorium on granting new exploration licenses," the Herald reported, "but... that could change following the country's May general elections. BPC has contacted 10 major international oil companies about partnering in its oil exploration operations."
A review of Deveaux's statements on this matter over many months, if not years, shows an entirely consistent position. He has repeatedly stated that the exploration freeze will remain in effect until an updated regulatory system has been put in place. He has also said that the present government is committed to the widest possible public consultation on the issue of oil production.
However, if you listen to the talk shows, some Bahamians are already gearing up to stop work and collect their "black gold" dividend cheques, while others are worried about secret backroom deals in which the well-connected carve up the country's seabed for their personal benefit.
Interestingly, there may be some truth to this. As mentioned earlier, experts have believed for decades that large quantities of oil and gas lie beneath the Bahamian seabed, and now that drilling technologies and market prices have reached the point where exploitation is not only feasible but profitable, we can reasonably project a massive influx of petroleum revenues in the near future.
But that is precisely why the government is seeking to overhaul our regulatory, legislative, environmental and financial regimes, in order to lay the groundwork for the orderly development of this industry (whether you like it or not). As Deveaux told me over the weekend: "Without detailing all the issues inherent in something so materially significant, it is a clear responsibility of the government to prepare the country for oil and its likely consequences."
The DNA appears to be confused because, under existing Bahamian law, licensees are required to drill an exploratory well within a certain timeframe - which in BPC's case is prior to April 2013 - or risk forfeiting their rights. The company says it has completed the required environmental impact assessment for this test well and is already working on a management plan.
Meanwhile, Environment Ministry officials have met with their counterparts in Norway to discuss revisions to the existing act and regulations, and consultants have produced working drafts for the government to review, after which they will go to the attorney-general. Deveaux says the proposed regulatory system will be included in his hand-over notes for the next government.
"Our visit to Norway in December was very useful and the government has agreed in principle to use that country's policies as a guide in developing a Bahamian petroleum industry," Deveaux said.
Norway began offshore petroleum production in 1971 and is now the world's seventh largest oil exporter and second largest gas exporter, with some 600 licenses awarded to a variety of companies. Norwegian officials have advised the Bahamas to have all the essential elements of oil and gas governance in place before any drilling begins. These include environmental, safety, tax, revenue, training and employment policies; contingency plans; and insurance requirements.
Norway's national petroleum policy seeks "to ensure long term management of, and value-creation from, the country's petroleum resources". Oil and gas activities are restricted to offshore waters, and all subsea resources are vested in the state, which is charged with managing them for the benefit of Norwegian society as a whole.
As we said, under the current Bahamian act, an exploration license includes an obligation to drill, and a bond must be posted to that effect as a way of precluding speculators. Exploration licenses are awarded for an initial term of three years, renewable for two successive three-year periods, but the 2008 moratorium meant that BPC's original license was put on hold and never technically renewed.
Similarly, if BPC's exploration is successful, current law says it is "entitled" to a renewable 30-year lease to begin commercial production. The royalty rate for production of oil and gas is based on a sliding scale of 12.5 to 25 per cent (from which the lease fee is deducted), with no other taxes or fees required. Equipment can also be imported duty-free.
On its website, BPC says that its license expires on April 26, and it has applied for renewal. The company notes that if it meets its obligations, "the governor-general shall renew the licences for another three years provided the company commits to drill an exploration well and (starts) the well before the end of the first renewal year, ie, by April 26, 2013".
So there is clearly some tension between the positions of the government and BPC, which claims to have invested $50 million so far to explore. Appraisal drilling is projected to cost several hundred million more, and obviously the company expects to benefit from this investment. But the petroleum act was written 40 years ago, and is silent on many of the complex issues the Bahamas would face as an oil producer.
Meanwhile, the DNA has rightly argued that oil drilling threatens two of the country's biggest industries - tourism and fishing. "(We) demand to know if Mr. Deveaux and the FNM government have ensured the protection of Bahamian interests," Ben Albury says. Well, the short answer is that Deveaux has repeatedly talked of the need to train Bahamians to manage a new regulatory environment.
"We have to come to the public with full information," Deveaux told me. "We want a standard of management similar to that of Norway. We need a petroleum directorate that is fully staffed with a range of expertise, including financial. If oil is produced we will be dealing with billions of dollars, changing the whole culture of the country and the way the government deals with money. It is no small thing."
In Norway, for example, surplus oil revenue is deposited in a $600 billion sovereign wealth fund so that the country's non-renewable resources can benefit future generations. The fund is managed by the central bank, under rules developed by the Ministry of Finance, and is responsible to parliament, with the interest used to cover government pension obligations.
Consultants have also advised the Bahamas to increase royalties and adopt profit sharing with oil companies in order to compensate for the absence of a corporate income tax.
As noted earlier, BPC's licenses were awarded by the Christie administration in 2006, and signed by former Governor-General Arthur Hanna in April, 2007. It is noteworthy that PLP candidate Jerome Gomez is the company's resident manager, former PLP cabinet minister Sean McWeeney is its senior counsel, and PLP deputy leader Brave Davis' law firm is the company's onshore legal advisor.
What is even more noteworthy is that the PLP has so far ignored this important public debate. The FNM's position is that "nothing can happen until the government approves and nothing will happen until there is public consultation". The DNA says it will hold a national referendum on oil exploration and production. The PLP is heavily conflicted in this matter and has said nothing.
Did someone mention carve-up and cover-up?
* What do you think? Send comments to larry@tribunemedia.net or visit www.bahamapundit.com.
March 21, 2012
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