Will there be offshore oil exploration?

andre cho

On Tuesday night we told you about the seventeen concessions that were granted to companies for oil explorations.  The environmental community is uproar and the Association of Protected Areas Management Organization, APAMO and OCEANA expressed resounding anger and disapproval.  But how much did these companies pay for the concessions? And can they just go out and drill on the reef or on the cayes? News Five went to the capital today and spoke to Andre Cho, the Inspector of Petroleum in the Department of Petroleum and Geology. He said the companies would need approval of certain government departments before they can drill. And can government just reject the concessions they have granted, a move that NGO’s have been clamoring for? Cho says not for areas that already have licenses to explore.

Jose Sanchez

“You have seventeen companies, I know concessions have been given under both UDP and PUP administrations. How many under were given under each?”

Andre Cho, Inspector of Petroleum

“Out of the seventeen licenses, contracts that we have right now, only the contract for OPIC, which is the Taiwanese State oil company and recently Northern Spirit resources from Canada. Those are the only two that have been issued by the new administration. The license for OPIC was issued, if I remember correctly, in January 2009 and the licenses for Northern Spirit were issued in March or April 2010, which is just a month or so ago.”

Jose Sanchez

“It seems like vast areas, the concessions. Per acre, more or less how much do they pay for this access?”

Andre Cho

“The companies pay an annual administrative fee of ten thousand US; everybody pays that. Then they have to pay rent and based on the size of their contract area, the rent varies because the rent is ten cents US. per acre for the first two years then goes up to fifteen cent per acre for next two, then it goes up twenty cent per acre for the next two years then forty cents per acre for the last two; it’s a total of eight exploration years. So every two years they have to relinquish twenty-five percent of the acreage and the rent goes up. That forces them to work because they know that they will lose acreage and they have to pay more rent. So that’s an incentive to work quickly. That’s common worldwide.”

Jose Sanchez

“So having a concession doesn’t grant these companies the right to just go and drill.”

Andre Cho

“Yes, exactly, they ultimately have to go and get environmental clearance and they do that through the environmental process where they either do an EIA ort the environmental department would grant clearance through and environmental compliance plan. Of course, they will determine what they can do, where they can do it and obviously they can’t drill on the reef, they can’t drill near to coral patches etcetera. Those are the things that the environmental department would look at and put restrictions on. So they would have to work with the environmental department and they would have to work with the conditions set.”

Jose Sanchez

“Now, drilling is one thing but when you actually find oil, when it comes to transportation accidents can happen. If you take a look at the situation in the US, I think they spent over three hundred million US dollars so far and can’t contain it. Is there funding currently available to protect, to clean up in terms of this sort of catastrophe?”

Andre Cho

“Well, each contract requires that the contractor, once he makes a discovery and starts producing has to pay a certain amount of money, a percentage of revenue to a common fund, which the petroleum regulations call for. Those monies stay in that fund in the event there is an accident and the company runs away or goes bankrupt and doesn’t have money, the government has that money to immediately activate and take care of the spill or accident. So that’s a provision that’s made in the petroleum regulations.”

Jose Sanchez

“A very important question, especially environmentalists want answered is, even though the concessions have been given, monies have been collected, if the government wants to renege, wants to say you know what, we heard the cries of the country. There will be no drilling, no search for oil offshore. Can they do that?”

Andre Cho

“Well, remember there are companies that have valid exploration licenses already. The government can do that in a case where there’s an area that has been under discussion for a while on whether they should allow exploration, they can make a decision and just ban that area. But in areas where they is a license already, they can’t do that. They would have to look at it, sit with the companies and then determine what is the best plan of action.  They can’t just ban exploration in those areas that are already under exploration licenses.

We’ll have more on this on Thursday.