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ENERGY Caribbean Yearbook (2013-14)

Countries belize Plenty

Countries belize Plenty of setbacks – but not fatal Belize became a Caricom oil producer in 2005 after 50 years of trying, and was doing quite well until it suffered a number of body blows that will make 2013 a difficult year for the industry. The first blow is that production from its two fields, Spanish Lookout and Never Delay in western Belize, has plummeted. Belize Natural Energy (BNEL) identified retrievable oil reserves with its first exploratory well eight years ago, and output rose rapidly to over 5,000 b/d. But it has since declined to about 2,550 b/d, not only depriving the government of much-needed revenue but reducing the associated gas and liquefied petroleum gas available for the local market. The second blow is that other explorationists have not been able to replicate BNEL’s initial success. New World Oil and Gas was forced to plug and abandon its Rio Bravo 1 exploratory well in northwestern Belize after failing to find oil, on the heels of a similar failure with its Blue Creek 1 and 2 wells. The company is putting a brave face on it, and pledges to return to the Blue Creek area in due course, because “with multiple prospects already identified, we believe it is only a matter of time before we locate a trap of significant size.” The third blow has the biggest disruptive potential for the short to medium term: the Belize Supreme Court ruled that all drilling contracts for offshore exploration issued by the government between 2004 and 2007 are “null and void.” It decided that proper environmental impact assessments had not been carried out before the signing of contracts, as required by law. It also declared that the companies involved, which include Island Oil Belize, Tropical Energy, Petro Belize, Princess Petroleum, Providence Energy and Sol Oil, “had failed to prove an ability to contribute the necessary funds, assets, machinery, equipment, tools and technical Hon. Senator Joy Grant (courtesy www.belize.gov.bz) expertise to drill safely.” The suit was brought by two environmental organisations, Citizens Organised for Liberty through Action and the Belize Coalition to save our Natural Heritage. The latter has been agitating for some time to stop offshore exploration following BP’s Macondo well blowout in the Gulf of Mexico in 2010. The government responded by offering a referendum on the matter, but that has been on hold for some time. An appeal against the judgment will probably be made but, in the meantime, Belize’s offshore acreage is out of bounds for exploration, a fact which will hardly encourage international oil companies to look seriously at offshore prospects. The bidding rounds which the government says it wants to introduce will have to be confined to the onshore for the foreseeable future. But the future for hydrocarbons in Belize is not entirely bleak, since companies which already hold onshore licences will want to get started on exploration. These include Marenco, US Capital Energy, Treaty Energy and the French firm Parenco. Belize’s minister of energy, A. Joy Grant, is prepared to predict “a spate of exploratory drilling over the next few years, based on what the companies see as promising potential in their blocks.” Belize is committed to renewable energy, as a participant in the Caricom Energy Plan. Minister Grant contends that already generates more electricity from renewable resources – 68% – than any other Caricom member, thanks to the wide use of sugar cane residue, bagasse, to heat boilers for the industry’s own power needs, the surplus being passed on to the national grid. Belize generates more electricity from renewable resources – 68% – than any other Caricom member 32

Countries jamaica Restarting the exploration drive Jamaica will be trying in 2013 to get its derailed programme for offshore exploration back on track, and to find more reliable companies on which to pin its faith for a hydrocarbon future. Last year, its minister of science, technology, energy and mining, Phillip Paulwell, had to terminate production sharing agreements with three companies – Finder/Flow, Sagres/Rainville and Proteam. They had failed to live up to the seismic or drilling obligations in the licences they had acquired over the last eight years for a total of 12 blocks off Jamaica’s south and southeast coasts. Both Finder/Flow and Sagres/Rainville had come close to meeting their obligation to sink an exploratory well following the completion and interpretation of seismic, but neither was apparently able to find financial partners to help fund what was certain to be an expensive drilling project. Minister Paulwell, back in his old job following the return of the People’s National Party to office, has taken a nononsense approach to the lagging exploration programme. “I am not going to allow any company to hold on to any licence without living up to its obligations,” he warned. “We have to send a strong signal to the marketplace that we mean business.” If Jamaica wants to make any progress at all towards realising its long-held desire for at least some energy independence, it now has to start exploration again after a long hiatus. Eleven wells were drilled for oil between 1955 and 1982, two in the offshore, but none found hydrocarbon reservoirs. Some of those were sunk by big names in the business at the time – Union Texas, Occidental, and Italy’s Agip (which is still around). Minister Paulwell thinks he will be best served by going that route again but attracting stronger companies into the drilling campaign than the three most recent licencees. “We recognise the need to get larger players and we are pursuing a number of them,” he told this YEARBOOK. “I am not going to allow any company to hold on to any licence without living up to its obligations” The production-sharing agreements with Finder/Flow, Sagres/Rainville and Proteam emerged from the 2005 block round. The most recent block auction, in 2010-2011, produce no acceptable bids. Paulwell is now taking a different approach and will engage in bilateral negotiations with selected companies. He thinks this will afford more flexibility in agreeing terms. “My view is that the open-tender system does not seem to have worked. We will now engage companies in direct negotiations and come away with arrangements that we negotiate, rather than having a public bid.” This view has been strengthened by the lack of success in the 2010-2011 block auction, which Paulwell insists “was not marketed properly” (it opened during the time of the previous Jamaica Labour Party government). He says that more recent data has become available which “will make Jamaica far more attractive now,” and intends to “impress on some of the major corporations the raw data that we have which will show the substantial reserves we think Jamaica has.” On this basis, even the four land blocks that have been so far ignored by bidders – Negril, Portland, Santa Cruz and Windsor – might conceivably seem more attractive. While struggling to get the exploration process back on track, Paulwell is also preoccupied with the long-running problem of the Jamaican refinery, Petrojam, 51% of which is owned by the Petroleum Corporation of Jamaica (PCJ). Petrojam urgently needs to be upgraded from its present limited capacity of 35,000 b/d to around 50,000 b/d. Venezuela’s PdVSA, which has acquired the other 49%, is pledged to fund the upgrading. But if it does not happen, “we will have to shut it down. It’s as simple as that,” says Paulwell. The government has already decided to sell off one PCJ subsidiary – its fuels retailer, the Petroleum Company of Jamaica, better known as Petcom. energycaribbean YEARBOOK 2013/14 33

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