The AMT and BCH production oil sharing agreements...the Opposition handed them to the media a week ago. Since then, the CEO in the Ministry of Natural Resources who signed them has offered a hearty defense of the contracts, and the Prime Minister went further: he said they had Cabinet approval and were in the public interest. But today, all that went to water, as government announced that those contracts were being cancelled and revised.
The release follows up on the meeting we told you about last night involving key players in the Musa administration. They weighed the consequences of public fallout so close to an election and the implications of canceling a sovereign contract. But it seems that the scales fell on the side of cancellation, particularly with the public circulation of so many documents indicating that government was well and numerously advised to go one way and still, inexplicably, went another.
So the decision of that meeting was to revise the contracts to what must be called the Briceno terms; those terms the former Minister John Briceno submitted to Cabinet on June 5th, 2007, the day after he resigned.
So today’s release states that “Cabinet having reviewed minutes and memoranda regarding the granting of PSAs...has decided that government’s production share shall be based on the following formula:
- A production share of 20% on 0 to 5 thousand barrels,
- 25% on 5 to ten thousand barrels,
- 30% on 10 to 20 thousand barrels,
- 35% on 20 to 30 thousand barrels, and
- 40% on more than 30 thousand barrels.”
And then the release says, “this formula...shall also apply to PSAs granted to BCH and ZMT.”
First, we’ll note that the new formula quoted in the release is identical to what we have seen in Cabinet papers that were submitted by Briceno. It is also many more times what was in the original BCH and ZMT agreements. And second, the wording suggests that all production sharing agreements, and there are at least 17 of them, will be brought under this regime.
That is the clear meaning of the release and if that is so, it can only mean that many, many legal headaches are ahead because the terms in Cabinet’s new formula are not in any of the agreements that we’ve seen.
But even if it is only for BCH and ZMT, it will still mean battles ahead. We today spoke with Zaid Flores one of the principals of ZMT and BCH. He said that he is very unhappy with the decision, and characterized the entire uproar and subsequent review, as “ridiculous.” He stressed that the agreement was negotiated and it is a binding legal agreement, and his group is reserving its options.
ZMT and BCH also sent out a release today, before the Cabinet announcement, and it says, “we did nothing wrong...we have nothing to hide and we did not bribe anyone...our PSA agreements will yield a take of approximately 60% for the government of Belize.”
