Bridging deed causes the dead to rise

Feb 05, 2020 Features / Columnists, Peeping Tom

My question is this: Why did the government not make the Bridging Deed public earlier? It was forced under intense public pressure to release the contract signed between itself and the oil companies, 18 months after the fact. So why then was the Bridging Deed, which is mentioned in the contract, not made public at the same time as the contract?
Wait! Don’t tell me it was because of Venezuela. I can hardly see how Venezuela could have been the excuse for the belated release of the contract or how it could be the reason for the non-release, up to now, of the Bridging Deed.
Let me make a confession. I have some knowledge – indeed I would say a fair knowledge – of contract law. And I have never heard of a Bridging Deed. Never. But perhaps this document, which seems to have miraculous power of resurrecting dead agreements, was formulated after my time.
The Janet Jagan administration granted an exploration license to Exxon in 1999. By the time June 2016 came around, that agreement was dead, since any further renewal would have been in contradiction to the Petroleum Act. The Petroleum (Exploration and Production) Act of 1986 provided that there can be more than two renewals of a petroleum prospecting license.
A prospecting license is what is needed for exploration. A company may apply for renewal, but the license cannot be renewed for more than two occasions. The argument has been made that the prospecting license was effectively expired by the time Exxon came to apply for its production license.
What all of this may suggest is that Exxon would have had to relinquish its blocks which had been assigned to it, and to apply for a new prospecting license, and then apply for a new production license which is a different license. It would appear that in order to circumvent this, a Bridging Deed was used. The Bridging Deed effectively brought back the dead agreement to life and linked it to Exxon’s application for a production license.
It is for the courts to determine whether that can be done, and if it is in violation of the law. Some persons have threatened to challenge the legality of the Exxon deal. But they said they could not proceed because they did not have the Bridging Deed.
I really cannot say whether there is any such thing known in contract law as a Bridging Deed. I have never heard of it. It would be interesting to learn if it is a novel instrument in the oil and gas industry.
The bottom line is that there is this. The Bridging Deed, in my opinion, appears to be intended to give legal cover to the agreement which was inked between Exxon, her partners, and the government of Guyana. But why was such an instrument needed?

The government should do the right thing and make public the Bridging Deed. But things also get complicated because in the Bridging Deed, a copy of which some persons have managed to obtain, there is mention now, of an escrow letter.
These letters are known in business law. In lines of credit, escrow letters provide the banks with authorization as to the terms and conditions under which funds are to be released to the seller. So, for example, if you are buying something from a supplier in China, the escrow letter would authorize the bank to only pay when the goods reach the buyer’s country. It is really a safeguard to ensure good faith in business transactions. Having the escrow letter provides comfort to both buyer and seller than neither of them can seek to rob the other, since in that case the funds would not be released.
Similarly, when dealing with shares, the escrow letter instructs the legal firm holding it, as to the conditions to be in place before a transaction involving shares.
I really cannot say why there was need for an escrow letter or even an escrow agent in respect to the Exxon deal, but perhaps when the letter is made public we will know.
The government is digging a deep hole for itself. It will only end up in further controversies unless it releases all the releasable documents concerning this deal, and for those which cannot be released, explain why this is so.
The government should also explain why it never released the Bridging Deed. For that matter it should explain whether it knew that there was a Bridging Deed, notwithstanding it being clearly stated in the contract.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper)

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