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Oil Explorer Blasts ‘Baseless’ Claims Over Its Insurance

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Simon Potter

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Petroleum Company (BPC) yesterday blasted its opponents for “deliberate and gross misrepresentation” over suggestions its exploratory well lacks adequate insurance coverage.

Simon Potter, the oil explorer’s chief executive, in a statement to Tribune Business accused environmental activists of making “baseless” allegations that expose “a near complete lack of understanding and continued naivety” over how business in The Bahamas and internationally is conducted.

He hit out after the Our Islands, Our Future coalition, which includes the two groups behind the Judicial Review challenge to the permits issued for BPC’s Perseverance One well, said its checks with the Lloyds of London insurance market produced no evidence that the oil explorer possesses sufficient insurance to cover the cost associated with oil pollution clean-up should an accident occur.

The group said it had contacted a senior Lloyds executive, who it named as Michaele Hawkins, its head of responsible business, who responded on behalf of the insurance market’s chief executive, John Neal, by saying in regard to BPC: “At present we don’t have any record that this risk is being underwritten in the Lloyd’s market.”

Our Islands, Our Future said it subsequently wrote again to Lloyd’s executives, submitting BPC’s public statements on the issue and requesting clarification, only to receive a January 14 reply that said: “Thanks for your follow up e-mail. We won’t be making any further comment on this particular project.”

The coalition seized on the responses to argue that serious questions have been raised over whether BPC has sufficient insurance coverage to finance oil spill remediation and protect the Bahamian environment, as it engaged the oil explorer in their latest verbal sparring on the margins of the Judicial Review action that is now before the Supreme Court.

Casuarina McKinney-Lambert, the Bahamas Reef Environment Educational Foundation’s (BREEF) executive director, said: “It is essential to have an environmental bond or equivalent financial guarantee, and adequate insurance to cover the cost of clean-up in the event of spill that might impact The Bahamas and also affect our neighbouring countries. We haven’t seen evidence of either of these things.”

However, Mr Potter said Lloyd’s executives would not possess details on every insurance contract underwritten by the syndicates it facilitates via the structure of a formalised market.

“As has previously been disclosed publicly by BPC, in accordance with its strict legal requirements the company has secured all insurances to be procured by a prudent operator for the Perseverance One well operations, and as stipulated by the Government of The Bahamas,” the BPC chief responded.

“Therefore, the statement from Our Islands, Our Future in relation to BPC’s insurance policies is baseless and entirely incorrect. As with all insurance contracts, there exists normal business confidentiality provisions, and whilst the details of BPC’s specific contracts have been provided to the Government of The Bahamas, they are otherwise subject to commercial confidentiality obligations.”

Mr Potter continued: “I would note further that Lloyd’s of London is the world’s leading insurance market, comprised of multiple risk-writing syndicates. It is not a company or similar such organisation where any one individual can attest to speak for Lloyd’s as a whole, but is rather a facilitator of insurance transactions on behalf of individual Lloyd’s syndicates.

“As such, the corporation of Lloyd’s does not have details of individual contracts underwritten by its syndicates. Thus choosing to represent an individual as speaking for the whole of the Lloyd’[s syndication market is yet another deliberate and gross misrepresentation of basic facts by Our Islands, Our Future, evidencing a near complete lack of understanding and continued naivety as to how businesses operating in The Bahamas (and internationally) actually operate.”

Mr Potter added that BPC, as a public company listed on London’s Alternative Investment Market (AIM), has an obligation to provide accurate disclosures to its shareholders and the market based on its obligations as a listed company.

“This is in direct contrast to Our Islands, Our Future that have no such obligation of truthfulness. Any public statements made by BPC are monitored by a nominated advisor (NOMAD) which acts as a regulator under authority from the London Stock Exchange so as to ensure BPC abides by its legal disclosure requirements,” he said.

The issue of BPC’s insurance coverage has attracted significant attention from environmental activists, who have demanded that the details be disclosed publicly. BPC has said the policy was placed through Aon UK, a major insurance broker.

Roberta Quant, BPC’s environmental scientist, previously told Tribune Business that the insurance coverage for the Perseverance One well will fully cover any tourism or fisheries losses “in the highly unlikely event” of any spill or environmental impact.

She added that the company had obtained protection “considerably in excess of the minimum levels of cover required by the Government” for the well that is currently being drilled in waters some 91 miles to the west of Andros near the maritime boundary with Cuba.

All necessary insurance cover had been secured through Aon UK, with insurers from Lloyd’s of London and other international markets underwriting it, Ms Quant said. “This policy provides cover for the costs of halting and remediating any incident during drilling, including the costs of redrill, the costs of drilling a relief well, and the costs of any remedial or clean-up operations,” she said.

“The insurance policy also provides third-party liability cover losses that might be suffered in the highly unlikely event of such an incident – for example, losses that a fisherman or hotel might suffer - although, as mentioned, this is considered to be an extremely remote and highly unlikely possibility.

“The level of insurance cover obtained is considerably in excess of the minimum levels of cover required by the Government, as well as commensurate with or in excess of cover in place for similar wells being drilled in other locations in the world,” Ms Quant continued.

“It is also worth noting that the insurance companies – who will be financially exposed to the costs of responding to any incidents – required BPC’s drilling plan, Environmental Impact Assessment, Environmental Authorisation and Environmental Management Plan to be submitted to a third-party technical review.

“This review assessed all BPC plans, policies and procedures to be of global standard, with risks appropriately identified and planned for, such that the project was able to secure insurances as required. Furthermore, all of our main well contractors, being Stena, Halliburton and Schlumberger, again global names and industry leaders, have extensive insurance policies of their own in place.”

Comments

TalRussell 2 months, 3 weeks ago

Watch your mouth Colony's Petroleum's president Comrade Simon's - blame the native's, mouth is dishing out blame like he's one of the 35 redshirts House-elected MPs or politically appointed member upper red chamber.Shakehead a quick once for this is so ugly a blame optics upyeahvote, Twice for not?

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ColumbusPillow 2 months, 3 weeks ago

Not a day passes without flak from these hysterical environmentalists Can you please figure out another way of solving the $10 billion national debt problem, PLEASE

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concerned799 2 months, 3 weeks ago

That $10 Billion dollar national debt will get so easy to pay off if the Bahamas has no significant tourism revenue for 10 years after an oil spill won't it?

Besides any new revenue from oil will be eaten up the same way our formerly strong finances were eaten up by over spending in the years leading up to the present, leaving in the end huge debt no matter what you do on oil drilling.

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concerned799 2 months, 3 weeks ago

The BP oil spill cost $61.6 Billion to clean up. We are further from major oil industry suppliers so our bill would probably be maybe 25-30% higher, plus inflation as these were 2010 era costs.

https://www.washingtonpost.com/busine...">https://www.washingtonpost.com/busine...

Insurance or not, you would have to the biggest fool in the world to think this princely sum of $61.6 Billion + 25-30% surcharge for distance and lack of local spill suppliers would ever come to the Bahamas if a spill occured.

It will never ever come.

We might as well dream of finding sunk Spanish galleons and using that to pay off such a catastrophe. At least then, in theory, you might find such a galleon in Bahamas waters and might actually collect on it.

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