It has been nearly two-and-a-half years since the controversial signing of the Oban Energies project for East Grand Bahama triggered major pushback, and while the investors remain hopeful that the Minnis administration will agree to an amended deal, frustration is setting in.
The last meeting the government’s technical committee had with Oban’s team was in March 2019, according to Oban President Alexander Grikitis, who told National Review this week investors remain very much interested in the project, which he said has been scaled back to make it a greener operation.
The original agreement signed with the government in February 2018 was for a $4 billion oil refinery and $1.5 billion liquid bulk facility.
But the signing triggered immediate concerns from environmental groups.
East Grand Bahama is home to three national parks and has a complex and picturesque mangrove system that protects the land, adding to the uniqueness and specialness of this area.
Amid a firestorm over controversial elements of that agreement, both sides agreed to renegotiate terms.
There has barely been movement in that regard, however.
Asked about the frustration of waiting for the government to conclude negotiations for a new deal, Grikitis said: “I have 22 shareholders and four board members I have to communicate to and they’ve put millions upon millions of dollars into this project.
“They continue to help get aide down to The Bahamas to help The Bahamas be a better place (after Hurricane Dorian). There are a lot of community-type programs that they plan to do in The Bahamas as well, mainly in the East Grand Bahama communities.
“The shareholders are like, ‘Listen, we want to keep doing stuff. We want to help these people. We want to help The Bahamas. We want to get this project moving forward.’
“If we were already approved, we would already have been part built and…we would already have been making profits for the community with money going to national insurance, money going into jobs.
“That type of frustration, when you see other people moving their project forward and you sitting in the sidelines and standstill, it is very frustrating.”
Grikitis said Oban’s team listened to concerns and made some adjustments that resulted in a “huge scaleback in the size of the project”.
“From an environmental standpoint, we listened to environmentalists, we listened to Bahamians,” he said. “We went out and hired the best engineers and we changed the design and it also changes with the design in where the oil business is going with the economy and with the world. Now, I would say, we’re a much greener facility and we’re waiting to express more of that.
“A lot of people brought up to us that we were doing a full complex refinery. We’ve scaled back to do a processing unit, which I doubt a lot of people are aware of, which just takes off the top crude instead of a full complex refinery, so we have full 99 percent hydrocarbon recovery from our facility, which wasn’t what our initial project was. That’s been scaled back and a supplement to our EIA (environmental impact assessment) has since been added as well.”
In its heads of agreement, Oban agreed to create 600 direct jobs and 1,000 indirect jobs during the construction period and 250 direct full-time jobs during operations.
The developer committed to employing 80 percent Bahamians and 20 percent non-Bahamians during construction.
Grikitis said, “The one thing we didn’t change was our jobs.
“Our [number] of jobs that we’re [providing] during construction is still there. We’re still guaranteeing 600 jobs, which is 480 Bahamian jobs during construction and I’m told now by my engineers to catch up with the times, [we’re] going to be more than 1,000, as well as 250 full-time jobs after completion of the project.
“It also scales back the amount of acreage that we need, but it doesn’t scale back anything else from a standpoint that we’re still doing everything we originally agreed to in the original thing; we just scaled back.”
Environmental interests and other observers were angered by the fact that the government signed the project without a completed EIA.
One of the controversial provisions of the agreement stated: “The parties agree that the government shall not have the right to terminate these heads of agreement based upon any EIA report, but instead shall work with the developer to mitigate any concerns. If the government does not provide any such comments to the EIA within the aforementioned 60-day period, the EIA shall be deemed acceptable to the government.”
The EIA was completed in December 2018, according to Grikitis.
Following weeks of being lambasted and a firestorm of headlines regarding the Oban agreement, Prime Minister Dr. Hubert Minnis admitted in March 2018 that the government made a series of missteps regarding the deal, in its haste to boost the economy of Grand Bahama. Minnis ordered a subcommittee and technical advisory group to examine the deal in hopes of renegotiating.
Ahead of the March 2019 meetings with Oban’s team, Labour Minister Dion Foulkes, the head of a Cabinet subcommittee, said the outcome of the government’s negotiations with the company would determine whether it kills the deal.
Grikitis said the last meeting the company had was between its lawyer, Greg Cotis, and the government’s then legal representative, Loren Klein, in May 2019.
Foulkes said yesterday the government is “in the process of identifying a replacement” given that Klein, its lead negotiator, was made a judge.
But this does not explain why there was no movement on the matter in the eight months prior to Klein’s judicial appointment and the last meeting with Oban. Klein became a judge in January 2020.
Of course, the Minnis administration has had to deal with Hurricane Dorian’s aftermath and the current COVID-19 crisis.
At the time of the initial signing, government officials had touted the economic elements of the project.
East Grand Bahama still desperately needs a boost, but Oban does not seem to be on the government’s radar.
A McClean’s Town resident, Captain Philip Thomas, whose son and three grand children disappeared in Hurricane Dorian last September, said residents of East Grand Bahama are still rebuilding their lives and need jobs for their economic survival.
Thomas said the Equinor spill in the recent hurricane does not dissuade him from pushing for the Oban project. The most recent estimate from the South Riding Point terminal states that 55,000 barrels of oil were spilled.
“I see no reason why the company (Oban) can’t coexist (with the environment),” said Thomas, who heads the East Grand Bahama Development Committee, which discussed the Oban matter with Deputy Prime Minister and Minister of Finance Peter Turnquest, the East Grand Bahama MP, earlier this month.
“Right now, everything in East Grand Bahamas is devastated, truly wiped out; even Equinor is laying off people, so we need some kind of economy to get started… I’d like to see them get started.”
Dorian blew the roofs off several of Equinor’s storage tanks, distributing oil across the acreage of the property into the neighboring forest and sea.
Grikitis said Oban has adjusted its plan in response to the Equinor spill.
“There were concerns ‘what if something like Dorian happens?’,” the Oban president said.
“Since Dorian, we have updated everything, that would be more in our EMP (environmental management plan)…where we moved our property up 22 feet to avoid any water penetration if there is another hurricane like Dorian because we understand that’s where the waterline went to.”
He said the new design would provide for protection around Oban’s property so if there is any spillage nothing would go off into the local environment, so it can capture everything.
Last year February, Turnquest said the government was trying to determine whether the deal was “something that we want to proceed with in terms of the kind of installation versus maybe considering the touristic elements that are now developing on the island”.
Tourism has been obliterated by the COVID-19 pandemic, however, with thousands of tourism workers among the unemployed.
Grikitis said in his interview with National Review the current crisis demonstrates why projects of this nature are important.
“We think right now it’s a time between Hurricane Dorian and the unfortunateness of what happened to The Bahamas and now COVID hitting the world. I think now more than ever The Bahamas needs projects like Oban,” he said.
The Minnis administration does not appear to have much enthusiasm for Oban, however.