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Investigation raises questions over safeguards against future oil and gas exploration.

Words: Adam Cantwell-Corn, Alec Saelens, Sid Ryan and Lorna Stephenson

This story is a series on the Bristol Port sell off

There appear to be no restrictions on Bristol Port Company subsidiaries’ ability to apply for a fracking license

Documents recently obtained by the Cable show that the protections against fracking at Bristol Port in Avonmouth are not as claimed by the former Mayor and council.

On the eve of the mayoral election in May 2016, senior officials at the council and then-mayor George Ferguson said the council had negotiated a contract “which prevented the port company from applying for a fracking licence” in the controversial £10 million deal with Bristol Port Company.

Mr Ferguson and Robert Orrett, the council’s service director for property, stated that the contract restricted Bristol Port Company from pursuing a Petroleum Exploration and Development Licence (PEDL). When asked if the restriction also applied to subsidiary companies wholly or partly owned by the Port Company, they confirmed that it did with Mr Ferguson simply saying “Yes”. The question of subsidiaries is significant as 8 months before the sale it was made known to the council that any eventual exploration would be carried out by Bristol Oil and Gas Ltd, a wholly owned subsidiary.

The documents however seem to tell another story. The PEDL clause in the final sale contract obtained by the Cable makes no mention of subsidiaries, stating only: “The Buyer hereby covenants with the Seller that the Buyer is not in the process of and will not in the future apply […] for a for a PEDL.”

Two solicitors and two barristers confirmed that the contract does not cover subsidiaries, but declined to go on record, some of them citing the politically sensitive nature of the issue.

The kinds of documents we got from an FOI“The restriction in the sale contract on applying for a PEDL is only binding on the buyer and no other members of its corporate group,” says Robert Triggs, a lawyer who regularly advises the public and private sector on contractual interpretation and major projects. (Full disclosure: Mr Triggs’ statements were made in his professional capacity. He is also an elected director of the Cable and treasurer of Bristol Green Party.)

Addressing whether the council could theoretically have restricted subsidiaries, Mr Triggs added, “It is perfectly possible to expressly limit the activities of wholly- or majority-owned subsidiaries in a contract. All that is required is a covenant (in other words, a contractual promise) and these are frequently inserted into commercial and financial documentation”.

Whilst confirming that subsidiaries are not bound in this instance, one other solicitor raised the remote possibility that restrictions could theoretically be ‘implied’ by the contract, even if not explicitly mentioned.

This possibility is undermined however by other details in the contract with one lawyer saying that: “It’s odd that some of the covenants that appear in the transfer are completely tied up, and the PEDL clause is pretty wishy-washy.”

There appear, then, to be no restrictions on Bristol Port Company subsidiaries’ ability to apply for a fracking license. But documentary evidence also indicates that even the restriction on the Port Company itself has been watered down.

The new version of the contract struck out any restriction on Bristol Port Company assisting or becoming involved with a petroleum exploration and development licence application

The draft contract of 26 June 2015 states: “the Buyer is not in the process of and will not in the future apply for or assist or become involved with an application for a Petroleum and Exploratory Development Licence”. Just a few days later, following a conversation with Mr Orrett, the Port Company presented the council with a revised wording of the PEDL clause that they said they said “we can live with”.

This new version struck out any mention of restricting Bristol Port Company from ‘assisting or becoming involved with’ a PEDL application, eventually making its way into the final contract little more than a month later.

Combined with the lack of comprehensive restrictions on subsidiaries, this suggests Bristol Oil and Gas could indeed apply for a new fracking license, and that Bristol Port Company would be able to ‘assist’ it, along with any third-party PEDL applicants.

The council’s response

We have presented Bristol council with this interpretation and asked for clarification. A spokesperson said: “The Council has spent countless hours at taxpayer expense assisting the Bristol Cable with access to information, commentary and explanation about this issue, over and above legal requirements. We do not believe their portrayal of the issue has been accurate.

“We reject any accusation or implication that the Council, any officer, the former Mayor or any Councillor mislead the public or the Cable and consider this to be defamatory,” the spokesperson added.

“Any statement or information provided has been in good faith and supported by advice from legal counsel on the sale of the residual freehold of the port. We maintain that the sale process offered more protection, not less, from the risk of an application for a PEDL license.”

Mr Ferguson has not responded to a request for comment by the Cable.

In the interests of transparency

Whether any eventual resource exploitation will occur depends on several factors. These include whether a company such as Bristol Oil and Gas Limited can gain a PEDL, deem the venture viable and profitable and clear the necessary regulatory hurdles, which are favourable to potential frackers. Councils can object but, as recent events in Lancashire demonstrate, they can be overridden.

Nevertheless, the public has remained unaware of key details of the controversial Bristol Port land sale and their potential implications for fracking at Avonmouth – a matter of significant public interest. Documents relating to the port freehold sale were not released until a year after the deal was signed, and now statements by elected and unelected officials on the protections offered appear to be in serious doubt.

Relevant documents: 

Heads of Agreement: First Corporate Shipping (Bristol Port Company) and Bristol City Council for the Exploration of Oil and Gas

Email correspondence between First Corporate Shipping (Bristol Port Company) and Bristol City Council

Unsigned Port sale contract, 26.06.15

Final Port sale contract, 04.08.15

Port sale property transfer document

 

 

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