Victory in the Algarve as Government halts oil exploration - Portfuel deals scrapped - RepsolPartex loses deposit

The government has scrapped the Tavira and Aljezur onshore exploration and extraction contracts with Sousa Cintra's company Portfuel. The Repsol-Partex concession contracts covering offshore exploration blocks also are to be halted as the government recognises that the Algarve is serious in its opposition to hosting an oil industry.

Neither Portfuel nor Repsol-Partex will be drilling for oil or gas. Source within government have confirmed to Diário de Notícias (see image below) that the government already has rescinded the contracts with Sousa Cintra's company covering the Aljezur and Tavira concession areas and has begun a rescission process for the Repsol-Partex concession contract for exploration, research, development and production of oil in the Algarve’s offshore areas.

Notification letters already have been sent to companies.

The decision on Portfuel was taken a few days ago, following the government's recent request that the Attorney General's Office provides an opinion on the Sousa Cintra deal.

The reply was that Sousa Cintra's company Portfuel had been set up just to apply for the concession, has zero experience in the oil and gas business, has no employees and has been in operation for less that than the three years stipulated in the contract terms.

In November this year, the Secretary of State for Energy, Jorge Seguro Sanches, said he was aware of all the contract details and had asked for clarification from the Attorney General's Office before he made a decision "that best defends the public interest."  

The contract with Portfuel, signed in September 2015 by the former Minister of the Environment, Jorge Moreira da Silva, has been widely criticised by the Algarve population and the region’s mayors.

Sousa Cintra assured anyone who would listen that he "rigorously" had complied with all the contract terms and did not understand the "noise and confusion" surrounding a project "that may be very worthwhile for the country."

Sousa Cintra’s portrayal as a national hero, just doing what is right for his country, fooled nobody but himself as it was clear that he had not fulfilled the contract terms. Questions remain as to how he managed to get Jorge Moreira da Silva's signature on a contract that clearly never should have been signed.

The Attorney General's Office now considers that there is has been an unequivocal failure by Portfuel to comply with the contract terms as the company also has failed to provide proof of the obligatory liability insurance.

This lack of insurance was a huge mistake and one that has tripped up Sousa Cintra as under clause eight of the contract the government was able to terminate the contract without paying a cent of taxpayers' money in compensation.

In the case of Repsol-Partex and the offshore concession, the National Entity for the Fuel Market (ENMC) concluded that there is an unjustified and unexplained non-fulfillment of the 2016 Work Plan, "which justifies the execution of the collateral provided by the members of the consortium."

This means the government has been able to trigger the enforcement process to retain the €4.5 million deposit lodged by the consortium as a guarantee of compliance with its obligations.

The agreement remains giving Galp-ENI Portugal the concession rights for the Alentejo Basin in the Lavagante, Santola and Gamba exploration blocks.

The first hole was to be drilled this year, but did not happen. The government has extended the drilling period into next year as the ENMC agreed that some of the delay was caused by the government due to legislative changes involving the private use of the national maritime space.

The government is sticking to its flawed mantra that these exploration contracts are in place" only so the nation can know what resources it might have."

For the remaining concession contracts, the government now is applying the contract terms and conditions with a hitherto unheard of rigour, insisting also that established environmental laws will be scrupulously adhered to "in order to protect the national interest and safeguard the environment."

The government states that these processes will require the “involvement of local authorities” which, in the Algarve at least, already have lodged legal proceedings against the onshore and offshore exploration and extraction concession.

The Algarve region’s ‘anti oil and gas exploration’ associations such as ASMAA and Palp, and its many local protest groups have cause for heavy and prolonged celebration not least for showing that ‘people power,’ a new concept in Portuguese politics, has succeeded.

The struggle has been noted for its group of dedicated, media-savvy, social networking, well-educated individuals who have taken on politicians and civil servants and exposed them as, at best, disingenuous.    

The government has done the right thing in the light of the 2016 Paris Agreement on climate change as the country moves away from a hydrocarbons industry that is in long-term structural decline, towards renewable energy production and technology.

Starting a domestic oil industry in Portugal, as most developed nations shift toward the sun, wind and water as the basis for energy production, was always going to be hard for the government to justify.

The threatened 'Algarve referendum on oil exploration' may have been the last straw for an administration that will want to be relected in the not-too-distant future.

ASMAA's Laurinda Seabra commented to algarvedailynews:

"Five years of fighting against oil drilling in the Algarve is finally getting some great results, and although I am deeply moved by the announcement in Diario de Noticias early this morning about the rescinding of the Portfuel contracts, and the intention by the government to rescind two of Partex/Repsol’s contracts for non-compliance, I am also still deeply concerned because the Galp/ENI contracts are still in force and we don't yet know whether this action affects all four Partex/Repsol contracts or just Lagosta and Lagostim.

"What this decision by the government really tells me is that the government wants to appear to back off, probably due to fears of negative impacts on upcoming municipal elections by our proposed local referendum, but nothing stops it from issuing new concession tenders and signing new contracts in the future.

"This does not mean the fight is over … it’s just a step in the right direction. We have won one small battle but not the anti-fossil fuel drilling war."

The owner of Portfuel said he was surprised at today’s news and that there must have been some mistake as his company had fulfilled the contract conditions “with all rigour.”

"It's news that makes no sense. We strictly comply with all the conditions of the contract. There is no fault on our part. It was all fulfilled with rigour. All conditions of the contract, there is no error. Things are going on as normal. There must be some misunderstanding," Sousa Cintra commented to news agency Lusa this morning, adding that he had not received a notification nor was he aware that a second opinion had been requested from the Attorney General's Office.

Portfuel’s lawyer, André Figueira, said, "We were not notified of anything. We are not aware of any opinion. We were aware of the first opinion, which said that we have fulfilled everything.”

Figueira added that the company already has delivered the work plan for 2017 and has been asked for a deposit for next year.

According to Diário de Notícias, letters already have been sent out to the companies involved so Sousa Cintra will be checking his mail box over the next few days.

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