“The oil agreement is unconstitutional,” Oilouch said in an interview.
The lawmakers questioned the agreement recently executed by President Johnson Toribiong.
Whipps said that it is the Olbiil Era Kelulau’s (OEK)responsibilities as provided in the Constitutionto levy and collect taxes and duties and excises.
He added that in turn the OEK is tasked to create laws to set what taxes or excises to be collected.
Whipps also noted that it is the OEK’s duties to regulate ownership, exploration and exploitation of natural resources.
He said that Toribiong overstepped his authority by approving the agreement.
“I believe he (Toribiong) has done something unconstitutional and we need to go over the agreement thoroughly as I see too many errors or the aspect of it is not right,” Whipps said.
Whipps added with the president signing the agreement has rendered the Oil and Task Force Commission’s work as useless.
The Commission is tasked to investigate and make recommendations to regulate oil exploration in Palau through a framework.
“I am perplexed as to how this came about and suddenly its passage is under urgency,” Whipps said.
He said that it is not the president who should be formulating the rental amount.
Toribiong who is in Manila, Philippines enroute to Taiwan, in a telephone interview told Horizon that he does not see anything unconstitutional in the agreement.
He said that he just renewed an old agreement executed before between former president Kuniwo Nakamura and the oil company.
“There is nothing new in the agreement,” the president said.
Oilouch and Whipps also questioned the president haste in signing the agreement where there is no legislation in place yet.
“The reason why I am too concerned is that the OEK is waiting for the legislation and the Palau president has gone ahead to do the agreement before the legislation is ready,” Whipps said.
However, Toribiong said he believes that the legislation will be put in place before any drilling proceeds.
He said that he has discussed the agreement with eight other senators prior to its signing.
During that meeting he said, the senators present did not object to the agreement.
He also said that the work of the Task Force and the Commission is to come up with legal framework on how to divide the profits if commercial quantities of oil are discovered.
“That is a different matter,” the president said.
He said that Palau would have lost its opportunity to gain from the drilling if he does not sign the agreement.
“The question is timing, we would have lost the opportunity under the Kayangel agreement,” Toribiong said.
The two senators also noted that Toribiong used to be the lawyer of the company which secured the concession.
“The president of Palau today was the lawyer for this company and now he is the president of Palau and he enters into agreement with them. Is this not a major conflict,” Whipps asked.
The president response to this was, “I believe in the project, I like it. I am no longer their lawyer, I have no personal involvement, investment or interest in this project.”
He said that it is in the OEK’s hands now whether they will approve the project or not.
The Senate Committee on Resources, Commerce, Trade and Development is reviewing the agreement and will come up with their assessment on it next week.
The president said he thinks the project is in the best interest of Palau.
Palau Pacific Energy Exploration was earlier granted license to explore for oil and gas a 1-million-acre concession in the country’s territorial waters.
A license agreement between Palau and PPX has been executed last week to allow exploration at Palau North Block which is under the jurisdiction of Kayangel State.
The agreement was signed between Robert Jordan, PPE President and President Toribiong .
The license is issued for 10 years and that drilling of an exploratory well should commence by no later than May 15, 2011.
The agreement stated that if no oil or gas of commercial quantities is discovered by May 15, 2012, the agreement will continue in effect on a year-to-year basis with licensee paying a rental of ten cents ($0.10) per acre times the number of acres in the Palau North Block.
The agreement further added that is commercial hydrocarbons are discovered then rental ceases.
Palau’s Kayangel state is located on the northern edge of the 300-mile long archipelago. PPE officials say the area is likely home to one of the world’s largest oil fields.
