Bahamas Petroleum Company awarded licences
Under the terms of Bahamas Petroleum Company’s granted licences the Governor General grants the licence holders, Bahamas Offshore Petroleum (BOP) and Island Offshore Petroleum (IOP), 100% subsidiaries of Bahamas Petroleum Company, the sole right to undertake exploration in its licence areas subject to conditions set out in the licences and Bahamian legislation and regulations.
The licences were originally granted for 12 years from April 2007, divided in to 4, equal 3-year periods. However the first 3-year period was extended for an additional 2 years at the request of the Government to run to April 2012. The requirements for the first term, which concluded 26th April 2012, were all considerably exceeded.
In 2015 the four southern commercially conjoined licences held by BOP were renewed for a second three year period, with the requirement to commence an exploration well by April 2017. Subsequently, on 17 March 2017 the Government of The Bahamas announced an extension to the BOP licences and attendant obligations for a period of 12 months with the resultant well commencement date falling in April 2018. Discussions with the Government regarding the renewal and extension of the IOP licence remain ongoing.
Exploration licence: 12 years in total based on 3-year renewal periods as estended per the above.
- Initial 3 year award
- 1st Renewal (years 4-6) @100% of acreage – renewal requires commitment to spud well before end of year 4 and a subsequent well drilled within a further 2 years
- 2nd Renewal (years 7-9) @ 50% – requires well drilled every 2 years
- 3rd Renewal (years 10-12) @ 50% – requires well drilled every 2 years
Production licence – 30 years plus additional 10 years (subject to approval of extension)
Exploration Licences and Applications
|Asset*||Holder||Interest||Status||Date of Next Renewal||Licence Area|
|The Bahamas - Bain Licence (offshore)||Bahamas Petroleum Company plc||100%||Exploration||8 June 2019||775,468 acres 3,138km²|
|The Bahamas - Cooper Licence (offshore)||Bahamas Petroleum Company plc||100%||Exploration||8 June 2019||777,934 acres 3,148km²|
|The Bahamas - Donaldson Licence (offshore)||Bahamas Petroleum Company plc||100%||Exploration||8 June 2019||778,855 acres 3,152km²|
|The Bahamas - Eneas Licence (offshore)||Bahamas Petroleum Company plc||100%||Exploration||8 June 2019||780,316 acres 3,158km²|
|The Bahamas - Miami Licence (offshore)||Bahamas Petroleum Company plc||100%||Exploration||TBD||760,973 acres 3,080km²|
Renewal: At grant on 26 April 2007 licences issued for 12 years with renewal each new three-year period, first three-year period granted a two-year extension. Second three-year period commenced on 8 June 2015 with 12 month extension granted on 17 March 2017 to allow the safe and timely design and execution of the Group’s exploration drilling programme.
|The Bahamas - Islamorada Licence(offshore)||Bahamas Petroleum Company plc||777,900 acres 3,148km²|
|The Bahamas - Zapata Licence (offshore)||Bahamas Petroleum Company plc||776,200 acres 3,141km²|
|The Bahamas - Andros Licence (offshore)||Bahamas Petroleum Company plc||774,500 acres 3,134km²|
How many licences does Bahamas Petroleum Company have? And, does Bahamas Petroleum Company have any pending applications?
Bahamas Petroleum Company currently owns 100% equity in five exploration licences, Bain, Cooper, Donaldson and Eneas in Southern Bahamas and Miami in Northern Bahamas. Bahamas Petroleum Company has made three, 100% equity applications named Zapata, Islamorada and Andros.
How did the existing licences and the pending applications get their names?
Upon making the licences application, Bahamas Petroleum Company was required to define the applied for area of blocks and to give that area a name; the Government then decides when awarding the licences whether they accept the proposed name(s) or whether they wish for the Company to change them. After the Government confirms and accepts the names they are typed into the actual licence agreement along with all other fiscal terms and obligations.
Is there any significance to the names of the licences and applications?
The names of the licences and applications hold no significance. The names of the four Southern licences run alphabetically and reflect ‘traditional’ Bahamian family names rather than pertaining to any particular person, or persons related to the oil industry or Bahamas Petroleum Company.
What are the main components of the Maritime Agreement and how does it affect Bahamas Petroleum Company?
The agreement delimiting the maritime boundaries of The Bahamas and Cuba was signed on 3 October, 2011, by the Deputy Prime Minister and Minister of Foreign Affairs Brent Symonette. This agreement defines the dividing line between the two countries and the limits of territorial waters. Further, it defines the exclusive economic zones and continental shelves between the two nations which then also allows for cooperation in the management of living and non-living marine resources in the area. The agreement delivers on the Government assurances to protect not only the Bahamian borders but also the extent of the granted exploration licences. This affords Bahamas Petroleum Company certainty as it relates to the limits and extent of its currently held exploration licences.
What are the Act(s) governing petroleum activities in The Bahamas? What do they allow?
Bahamas Petroleum Company four southern licences, namely, Bain, Cooper Donaldson and Eneas, remains to be governed by The Petroleum Act (‘the Act’) 1971 Chp 219 and the Petroleum Regulations 1978 Chp 219.The Petroleum Act (‘the Act’) 1971 Chp 219, governs Petroleum exploration, making provisions for the granting of Permits, Licences and Leases. Additionally, the Act covers the level of Royalties and granting of all rights required by a licensee or lessee in order that petroleum may be searched for, bored for, gotten, stored, treated, converted, or carried away. The Act is further refined by the Petroleum Regulations 1978 Chp 219; which goes beyond simply defining the term of the licence to actually detailing the procedures and obligations for the licence and/or lease. For instance, where the Act speaks only to Petroleum exploration; the Regulations specifically deal with the Term and Renewal of Licences, Expenditure and Pooling of Expenditure as well as Abandonment, Completion and Suspension of wells; etc.
In 2016, that Bahamas Government recently introduced four new pieces of legislation to modernize and regulate the Petroleum Industry in the Bahamas.The Petroleum Act 2016, the Petroleum Regulations 2016, the Petroleum (Health and Safety) Regulations 2016 and the Petroleum (Environmental Protection and Pollution Control) Regulation 2016 were all passed by Parliament and became law. Though the Company four southern licences have been grandfathered to the old Petroleum Legislation; Bahamas Petroleum Company exploration project and operations will not be disadvantaged. The Company has been advised that where the provisions of the old legislation are disadvantages or silent on matters of importance to the project development and success, the Minister will rely on the updated provisions of the Petroleum Act 2016 and the Petroleum Regulations 2016.
Additionally, the new regulations that will govern exploration of Petroleum in the Bahamas are the Petroleum (Health and Safety) Regulations 2016 and the Petroleum (Offshore Environmental Protection and Pollution Control) Regulations 2016. The H&S Regulations address matters of health and safety in the operation of facilities for petroleum exploration and extraction in The Bahamas. The H&S Regulations also address different health and safety requirements and reflects best international standards and practice for the safe operations of petroleum facilities. Further, the OEPPC Regulations provides rules for offshore installations related to the monitoring and prevention of pollution and or damage to the marine environment, the Bahamas and surrounding areas.
When were the current Licences awarded? And, what are the key terms and obligations?
Bahamas Petroleum Company was awarded five licences in 26 April 2007 for a twelve (12) year term, though the currency of the licence has to be renewed every 3 years – consistent with the Act and Regulations. A 2-year extension was granted to the first 3-year period in March 2008 after Bahamas Petroleum Company was requested to hold operations until The Bahamas/Cuba Delimitation agreement was assigned. Bahamas Petroleum Company accordingly deferred commencing seismic surveys in the awarded areas, with the first 2D survey not commencing until June 2010 and the 3D a year later in July 2011. Thus the renewal of the first ‘3’ year term was extended until 26 April 2012. Subsequently, the Government provided formal renewal of the Company’s four southern licences on 8 June 2015 with a further 12 month extension being provided on 17 March 2017. These extensions were intended to reflect the delays imposed on the Company whilst the Government updated its Oil & Gas regulations, which came into force in July 2016.
The key obligation of the four southern licences is for the commencement of a single exploration well within this licence area by April 2018. Additionally, the Company is required to pay annual rental fees for each licence block of $250,000 as well as submit annual reports on the activity and expenditure that has taken place in the licences.
There are certain reporting requirements for annual submission, such as a Plan Report showing annual expenditure for each licence; an amount which the Company has exceeded by a considerable amount.
Senator Hon. JoBeth Coleby-Davis, In-house Counsel
JoBeth is responsible for compliance and risk management of Bahamas Petroleum Company licences, Government relations and works closely with the management team to advise on legal and commercial risks associated with day to day business operations