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Large gas discovery announced - Left Bloc leader slams Aljezur exploratory well licence

8570The Left Bloc leader, Catarina Martins, visited Olhão on Saturday and spoke about the shock decision by the government to authorise exploratory drilling for oil and gas in the sea off Aljezur.

Reiterating her statement made in parliament on Friday, Martins said that all the conditions exists to halt the drilling by the Galp-ENI Eni consortium.

Martins (pictured below) believes that the authorisation given to the oil companies on January 11th to carry out work off the Costa Vicentina is filled with irregularities and should be repealed, since Portugal "can not allow the first well to be sunk.”

While visiting Olhão’s iconic markets on a trip largely devoted to supporting Left Bloc candidates in the forthcoming local elections, Catarina Martins explained why she thinks it is still possible to stop the drilling process.

Martins stated that the  whole question of oila nd gas drilling had been on hold while a public consultation was held last summer, during which time more than 40,000 people signed a petition against drilling – "and for good reason: the environmental danger."

The Left Bloc leader is well aware that the Algarve’s mayors and those covering regions up the west coast, are firmly against oil exploration. “Galp had already lost its remit as its licence expired at the end of 2016, " she said.

The Left Bloc’s position remains: it is vital to stop the process, "We are talking about the kind of well that people know for the worst of reasons, for example what happened in the Gulf of Mexico, where oil spilled for 88 days in a row."

Another consequence of the authorisation given to Galp-ENI to drill an exploratory well in the Santola concession off Aljezur, was to reactivate a process that has been on hold.

Martins said that if this first well goes ahead, this will enable the other concession holders to push ahead even though their exploration licences are as suspect as the one held by Galp-ENI.

For Catarina Martins this oil exploration business is an outdated economic model which, if adopted in Portugal, "could bring about very serious environmental damage in the future."

The government is in danger of losing its left wing support, without which it will have a difficult time passing legislation. The greens and PAN are fully behind a ban on oil exploration while the leading Socialist Party is empowering the oil companies by signing off the Galp-ENI licence with unheard of leniency, exempting the consortium from having to have liability insurance or lodging an indemnity.

Meanwhile, further up the coast at the Batalha and Pombal exploration blocks, Australis Oil & Gas has made an extraordinary announcement to the market concerning its resource estimates.

In the ‘2016 Year-end Resource Update,’ issued by Australis Oil & Gas, "the directors are pleased to report a doubling of independently assessed estimates."

“The resource estimates for Portugal have risen 96% from May 1st 2016 to the year end as a result of “updated seismic interpretations using a modern 3-D data set recently purchased from the Portuguese authorities which identified a gas field.”

Australis MD, Ian Lusted, commented that “The effective doubling in allocated net contingent resource to both of our assets is testimony to the intrinsic value the company believes they represent and the excellent technical work completed to demonstrate this to out independent assessors. These assets have been acquired based on our strategy of securing oil and gas assets with size potential at modest prices following the recent downturn in commodity prices.”

Technical work in 2016 in the Aljubarrota area in the Batalha concession focused on the gas discovery.

This area was surveyed in 2010 and Australis purchased this survey from the government in 2016 for a ‘nominal value’ and has just updated its structural maps, which have been used for its year-end resource report.

It seems therefore that the government  has had detailed resource maps since at least 2010, so has known all along the potential in this area, even before the Batalha and Pombal concession deal was signed.

The Prime Minister’s often quoted position of ‘just wanting to known what is out there’ is duplicitous, at least for these two blocks, as the Portuguese authorities already knew in great detail what  resources pay beneath and now have handed the 3-D report to the concession holder, ‘at a nominal cost.’

The emphasis by the Australis management on the modest cost of its Portuguese deal will stick in the throat of the Portuguese taxpayer who can expect royalties of between 0% and 8% depending on volume but only after all costs have been recovered, the onus being on Australis and other multinational to declare a profit. Oil company treasury departments are adept at reducing profitability in high tax areas to to zero by using internal licensing fees and other accountancy instruments to ensure any trading profits end up in tax-free offshore regimes.

This is the case with Portugal’s Partex Oil & Gas where the head office in the Cayman Islands despite the company wishing to give every impression of being Portuguese through-and-through.

From the Australis report, it is clear the government knew of a significant gas field back on in 2010 yet agreed the concession ‘at a modest cost,’ and sold the vital 3-D report for ‘a modest fee’.


 Click here to read the full Australis Oil & Gas report update .pdf.





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+1 #4 Ed 2017-01-30 17:17
IRC is corporation tax. By raising an internal invoice in a tax-free jurisdiction for 'royalty payments' corporation tax liability can be wiped out. TSU applies to employees and nobody know the status of the future workers on oil rigs but it is likely they will not be contracted through a Portuguese subsidiary due to the high income tax and social security costs. Why would they be? As for VAT, this assumes that gas is landed in Portugal, rather than in the processing plant in Spain and is by no means certain.

I have based my views on experience and the certainty that international and multinational companies spend a great deal of time and effort in reducing their tax bills to as close to zero as possible by a range of accountancy methods including transfer pricing and royalty payments. This is not confined to oil companies, the Viceroy Group at Quinta da Ombria is exactly the same
and even states the offshore royalty agreement on its website.

Having a Portuguese fiscal number means nothing and certainly does not mean you will be taxed in Portugal. I already have sent you a list of the concession holders and the addresses of the companies signing these agreements, many of which were not based in Portugal. You did not reply to that posting and, to be honest, I thought you oil company PR contract had run its course.

I loved the image of 'foreign interests' sponsoring Algarvedailynews, priceless.

Keep then coming Alix, it's always refreshing to hear from you.
-1 #3 Alix 2017-01-30 16:41
Again, Paul Rees is lying about the revenues for Portugal from a future exploration of the resources. The fiscal numbers in the contracts awarded by Portugal are all Portuguese, which means that all the taxes are paid in Portugal - IRC, TSU, IVA(VAT),....
Unfortunately, Paul views of this particular situation of Oil & Gas are totally biased towards foreigner interests (maybe because they sponsor its communication enterprise). Al
+5 #2 Maximillian 2017-01-30 10:05
Quoting Peter Booker:
Is the granting of these licences in any way connected with the simultaneous upswing in economic forecasts? Is the Prime Minister of Portugal allowing the oil companies free rein in return for economic and financial support?

If that were the case we wouldn't see these poor contract conditions. It looks more like the usual hidden agendas and self-enrichment.
+1 #1 Peter Booker 2017-01-30 08:22
Is the granting of these licences in any way connected with the simultaneous upswing in economic forecasts? Is the Prime Minister of Portugal allowing the oil companies free rein in return for economic and financial support?

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