Headline — 19 April 2013 — by Adele Ramos
PUP-given offshore contracts “unlawful, null and void” –Justice Oswell Legall

“Allowing oil exploration before any assessment of its effects on the environment is not only irresponsible, but reckless, especially in a situation where Belize may not be fully capable of handling effectively an oil spill.”
– Justice Oswell Legall

The court made two major findings: (1) no environmental assessment was carried out before the agreements were awarded, violating the EPA, and (2) contracts were given to companies that were unqualified and did not demonstrate a proven ability to contribute the necessary funds, assets, machinery equipment, tools and technical expertise necessary for the effective performance of the terms and conditions of the agreements, contrary to the Petroleum Act.

“…prior to entering into agreements for oil exploration and seismic testing, an assessment of their effects on the environment is required”

Supreme Court Justice Oswell Legall issued a landmark ruling on Tuesday morning, when he quashed six offshore contracts as “unlawful, null and void,” because Environmental Impact Assessments (EIAs) were not conducted before the Government of Belize gave concessions to the companies, mostly owned by foreign interests. Furthermore, the court ruled that the companies to which the contracts had been granted were unqualified.

The court went further to grant an injunction, barring the government from acting on the PSAs which Legall has quashed.

Former Minister of Natural Resources, Johnny Briceño, who approved the earliest of the six contracts to Island Oil Belize in 2004, admitted to Amandala today that the strict interpretation of the law, as he understands it, is that an EIA is required before the concession is granted. He said he knew Government was going to lose the suit filed by Oceana.

“Strictly speaking the law is very clear,” Briceño said.

However, legal counsel for the government, Denys Barrow, SC, a former Court of Appeal judge, disagrees and he has advised the Government of Belize to challenge Legall’s ruling in a higher court.

“With the greatest of respect, I think that is egregiously wrong,” Barrow told us, in commenting on Legall’s ruling.

“The Government of Belize will be appealing the decision rendered by Justice Legall,” the Ministry of Energy, Science and Technology and Public Utilities confirmed in a statement issued Tuesday, soon after the decision was announced.

Legall’s 44-page judgment said that the government, in issuing the petroleum contracts, also called Production Sharing Agreements or PSAs, violated national laws when it bypassed environmental considerations and granted the concessions to companies that did not meet the qualifications set out in law.

In the decision, Legall didn’t make a pronouncement against petroleum exploration or even offshore drilling, but he was clear in citing his concerns over the manner in which the contracts were issued.

“There is no doubt that oil exploration properly authorized and carried out would have positive effects on the economy of Belize and improve the standard of living of the Belizean people,” said Legall. “But oil exploration should be undertaken in accordance with the intention of the Environmental Protection Act and Regulations made thereunder, which are made to protect the environment, because if the environment suffers from an oil exploration disaster no one benefits,” he went on to say.

“The decision is a historic one as it chastises the government, especially Cabinet, saying that ‘Allowing oil exploration before any assessment of its effects on the environment is not only irresponsible, but reckless, especially in a situation where Belize may not be fully capable of handling effectively an oil spill,’” Oceana notes.

Oceana points to Legall’s comments that “the minister exceeded his jurisdiction when he entered into the agreements without first having or considering an environmental impact assessment of oil exploration on the environment.”

Whereas Briceño approved the contract for Island Oil on May 25, 2004, the remaining five contracts were signed by former Natural Resources Minister Florencio Marin, Sr., in a single day – October 12, 2007, at services reportedly held inside the Commercial Free Zone in Corozal. Miles Tropical Energy Ltd., Petro Belize Company Ltd., Princess Petroleum Ltd., Providence Energy Belize Ltd., and SOL Oil Belize Ltd. were the recipients of those contracts, which were all quashed by the court on Tuesday.

Briceño told us that the practice, even before his time, is that the EIA requirement is only applied to certain categories of petroleum-related activities.

He recalled the case that went before Justice Samuel Awich, in which he ruled in 2006 that an EIA was required for seismic testing inside the Sarstoon Temash National Park (STNP). Awich had quashed the Chief Forestry Officer’s memo to US Capital Energy granting the company permission to enter the park to do seismic testing. An EIA has since been approved and US Capital is now planning to proceed with petroleum exploration works in onshore Toledo.
Briceño also recalled that the EIA was a big issue when Belize Natural Energy first began working its concession area. They struck oil and were planning to proceed without an EIA, arguing that one was not necessary. Briceño said that government had to send police to shut down BNE’s operations until the EIA process was carried out.

The co-manager of the STNP, the Sarstoon-Temash Institute of Indigenous Management (SATIIM), led by Greg Choc, was the first entity to vocally oppose the concessions on environmental grounds, and Oceana and the Belize Coalition to Save Our Natural Heritage were the first to challenge the PSA’s, asking for the court to declare six of them unlawful, null and void.

Up to last November, 15 concessions were still in effect; however, some have since been relinquished while others have been cancelled. Of the six contracts challenged before the court, Government now says that only two are active: that for Princess and for Providence.

The Ministry of Energy, Science and Technology and Public Utilities said that the petroleum contracts for Miles Tropical Energy Limited, Petro Belize Company Limited and Sol Oil Belize Limited were terminated on April 12, 2013 by the Government of Belize, under the Petroleum Act, because the companies breached material obligations.

Meanwhile, it said, Island Oil’s contract, awarded in 2004, expired after its 8-year exploration period ended in 2012.

As the accompanying map shows, the biggest concession belongs to Princess Petroleum Ltd., which was granted 1.8 million acres offshore and 0.2 million acres onshore. The onshore work has been subcontracted to the US company, Treaty Energy.

Meanwhile, Amandala has confirmed from the Chief Executive Officer in the Ministry of Energy, Science and Technology and Public Utilities, Dr. Colin Young, that the government will respect the ruling, and advise Providence Energy, which has been in the process of pursuing seismic testing offshore, to halt its works. Young told us that the Legall ruling does not apply to the onshore contract being undertaken by Princess.
Attorney Barrow told us, though, that Legall’s ruling does not differentiate between offshore and onshore contracts but speaks to production sharing agreements in general. In light of this fact, Barrow said, Princess will have to decide how they will move forward. He said that they may consult with the ministry in trying to make that determination.

Dr. Young informed us that the Department of Geology and Petroleum has already been instructed to speak with the respective petroleum companies to ensure they know of the court’s ruling and adhere to it.

In the case of Providence, the CEO was firm that the company has to stand down on its activities, pending the outcome of the appeal.

Meanwhile, Young said, the government is not currently considering any new contracts for offshore works now or in the near future.

“This is a great day for the people and country of Belize and its democratic process and it shows that us, as ordinary citizens need not sit back and only complain about all the wrong decisions our government make[s], but can use the judiciary to settle these… this is what happened in this case,” said Audrey Matura-Shepherd, Vice President of Oceana in Belize.

Oceana initiated the suit challenging the offshore contracts in December 2011, and the Belize Coalition to Save our Natural Heritage and Citizens Organized for Liberty through Action (COLA) later joined as co-claimants.

In early stages of the court proceedings, government fought on technical grounds, saying that Oceana could not be allowed to file the claim because of limitations in law. Government later opposed the inclusion of COLA and the Coalition, and it also tried to get the court to strike off some of the witnesses. The claimants successfully fought off all government’s attempts to get the case thrown out on technical grounds.

“The Coalition is seeking legal interpretation of the judgment as it relates to Providence Energy Ltd. and its proposal to carry out seismic surveys and exploratory wells in its concession area which includes offshore and coastal protected areas including the Port Honduras Marine Reserve,” the Coalition said in a statement issued right after the ruling.

It also said that the ruling could be a precedent for onshore contracts in protected areas.

Several protected areas were removed from the concession areas while the case was under litigation before Legall.

The Coalition noted that, “In 2012, while the case was being heard in court, Providence Energy Ltd. relinquished Glover’s Reef Atoll Marine Reserve and Princess Petroleum Belize Ltd. relinquished the Lighthouse Reef Atoll which includes the Blue Hole and Halfmoon Caye Natural Monuments. Princess Petroleum Ltd. also relinquished Turneffe Atoll Marine Reserve.”

In responding to the ruling, the Ministry of Energy, Science and Technology and Public Utilities said, first off, that the Production Sharing Agreements (PSAs) that were declared “unlawful, null and void” by Justice Legall were all signed by the previous administration of the People’s United Party between May 25, 2004, and October 12, 2007.

Oceana pointed out, however, that the contracts were extended in 2009, which coincides with the first term of the ruling United Democratic Party.

Oceana hails the judgment as “a victory for the People of Belize, our democracy and the reef of Belize.”

Legall made a series of orders: He granted a declaration that the PSA dated 25 May 2004, and the other five Production Sharing Agreements dated 12 October 2007, made by the Government of Belize acting through the Ministry of Natural Resources, on the one part, and the individual companies, namely Island Oil Belize Limited, Miles Tropical Energy Limited, Petro Belize Company Limited, Princess Petroleum Limited, Providence Energy Belize Limited and Sol Oil Belize Limited, of the other part, are unlawful null and void.

He also granted a declaration that before entering into agreements or contracts which authorize oil exploration and seismic surveys, an environmental impact assessment is required under the provisions of the Environmental Protection Act, Chapter 328 and the Environmental Impact Assessment Regulations 1995, as amended.

Thirdly, Legall approved an injunction restraining the defendant, servants and agents from carrying out the provisions of the Production Sharing Agreements dated 25 May 2004 and 17 October 2007 referred to above.

The Government will also have to pay costs to the claimants in the case.

Godfrey Smith, SC, represented Oceana, COLA and the Coalition, whereas Denys Barrow, SC; Niger Hawke (Deputy Solicitor General) and Naima Barrow and Government Counsel Herbert Panton represented the defendants.

Earlier this year, Oceana lost a second case in which it challenged a decision by electoral authorities to not convene a national referendum on the issue of offshore drilling, on the claim that the required numbers to validate the petition were not received. Shepherd said that Tuesday’s ruling was a vindication of those who voted in a people-led referendum to say no to offshore drilling by a vote of 96 percent against it.

Oceana continues to call for a ban of offshore drilling. “This invigorates us to continue our work to call for a ban of all offshore oil exploration and drilling in our Belizean waters,’ added Matura-Shepherd.

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