|Oil explorer looks to Nov 2013 for drill|
Guardian Business Editor
Published: Sep 11, 2012
Oil explorers will have to wait until at least November 2013 before drilling an exploratory well in Bahamian waters.
The revised schedule is based on the hurricane season and an impending government-sponsored referendum on the issue of oil drilling.
Simon Potter, the CEO of Bahamas Petroleum Company (BPC), said the company is pleased to provide reassurance for shareholders on the integrity of the licenses. While the referendum will come at “additional costs” to both the government and BPC, he told Guardian Business from London that he respects the views of the current administration to carry out its mandate.
"The main issue is the hurricane season, in the sense the obligation was to start drilling in April 2013. Because we can't start at that time, given the notion of a referendum, then you have to flip to the end of the hurricane season," Potter said.
"We wouldn't start until after the hurricane season in 2013. That would be November or December 2013 at the earliest."
The top executive said BPC remains "well funded" despite the setback. Even if the company did everything it wants in 2012, BPC will still have a healthy balance in the bank, he said.
"That being said, obviously a delay or a longer time until we drill does consume cash. We are being pretty mindful of that as we go through the next year," Potter added.
Kenred Dorsett, the minister of environment, told Guardian Business yesterday that the timing of a referendum must be determined by the Prime Minister's Office.
“There are a number of other things coming to the Bahamian people by way of referendum. My ministry has discussed this with the prime minister. When a time is decided it will be communicated,” Dorsett said.
Until that time, BPC has other objectives on its radar.
Potter said a Bahamian Depositary Receipt (BDR), allowing shares to be seamlessly listed on the local index, will continue to push ahead despite the uncertainty of the exploratory drill. Whether people decide to buy the stock, however, is a decision for investors based on projections concerning the outcome of the referendum.
The CEO noted that the company is in a "much happier" position going forward. By acknowledging compliance, BPC can more accurately describe the asset to potential investors and stakeholders.
"We would love Bahamians to realize that gain as we go forward," he said.
On a more macro level, Potter hoped Bahamians will continue to appreciate the transformational potential of a commercial oil drilling operation in the country. The issue of oil drilling has risen just days after the International Monetary Fund (IMF) expressed concern over the country’s rising debt-to-GDP ratio and a large reoccurring deficit.
Similarly, the latest assessment from Moody's revealed it expects the deficit to "accelerate" over the coming months due to contributions for resort developments and social programs.
Potter told Guardian Business that a significant oil find would virtually erase the country's national debt within a couple of years.
"We obviously think there is a genuine case in terms of the benefits to the economy from the outcome of a positive exploratory well. We need to remember, however, that this is just an exploratory activity. We have yet to prove there is oil there. We would like to have the chance to drill to establish the possibilities of the region."
In the meantime, executives will be watching as a Russian company, Zarubezhneft, commences its exploratory well in Cuba just 100 kilometers from BPC's proposed site. Potter said BPC "has interest" in the Russian well. He noted that such a drill will not result in any benefit to Bahamians, even though it takes on a degree of risk due to Zarubezhneft's close proximity to the border.