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Oil could be the Algarve's ruin

oilrigAlgarve pressure group and source of much social commentary, Olhão Livre, today released information about the government deal with those oil and gas companies which have exploration rights off the southern coastline.

The original exploration authorisation laws signed by Cavaco Silva give some information but current licensing agreements are protected by confidentiality clauses.

The general exploration licensing laws have opened the door for oil and gas exploration in Portugal, but at a bargain price. Current president Cavaco Silva signed the measures which he said are designed to encourage the oil industry.

Silva therefore was happy that the income from oil production would only kick in after 300,000 tonnes. This tonnage, when equated to barrels of oil, means that the first 2 million barrels are free of tax. This is only for oil, if the exploration companies find gas, which seems more likely, then this is completely tax free as gas is not covered in the legislation.

For the Algarve blocs, it is only when the companies have recovered their full exploration costs and have extracted 2 million barrels for free, that any percentage share becomes due at just 10 cents and 25 cents per barrel of oil depending on which field, and zero for gas, according to the only information that has seeped into the public domain.

The Algarve and particularly the Ria Formosa Natural Park, will be the area most affected by exploration as its fishermen will be prevented from entering production areas, areas that have yet to be agreed or published.

There has been no Environmental Impact Assessment as the government decided rather conveniently that the drilling is far enough offshore for it to not impact the Algarve coastline. This anti-environmental dodge alone should be discussed in parliament and unmasked as another example of a government dazzled by riches and blind to threats. 

It is likely that drilling for natural gas will start this October. The nearest rig is planned to be just 8.5 kilometres south of the island of Culatra, as can be read in the document below. It is time the government said what is going on as the drilling process directly will affect the local fishing community.

It also would be polite and politic for a full explanation to be issued by the government whose lack of communication again leads the Algarve’s population to suspect it is being treated in a less than open manner. The oil companies involved have said nothing to put people's minds at rest.

It seems true that “the Algarve carries the risk and Lisbon gets the money.” Whether the recent assertion from the Left Bloc that "Lisbon despises the Algarve" looks increasingly likely to be true as questions remain unanswered and local politicians gagged.

The political grip on this matter is tight as the Algarve’s mayors have been unable to make up their minds on anything much due to intense party political pressures from above. Apart from Silves council, the others in a group display of spinelessness prefer not to comment despite their remit to look after the interests of their local populations.

The reduction in fishing areas and the environmental dangers associated with oil or gas production should not be endorsed without a full and open discussion, but the government prefers to cozy up to big business despite having signed one of the most advantageous licensing and extraction deals the industry has seen for years.

Locals are concerned that if oil production starts in earnest and leakage hits the Algarve’s sandy beaches the government has zero applicable experience to run a clean-up operation.

Any resulting compensation from oil companies is likely to go to the government and not to the Algarve which will be hit economically by a sharp decline in tourism income. The comment that an oil spill would be a job creation scheme failed to amuse locals.

The real problem is the lack of any regional democratic process with the risks held locally and the income, whatever it might eventually be, going to Lisbon.

As for the promise of hundreds of jobs in the Algarve, forget it. There is no pool of rig-ready labour waiting to start work. The exploration companies all are foreign owned and any hydrocarbons found will not be piped ashore to the Algarve with Sines and Spain the likely options.

This oil and gas matter is concerning on so many fronts, but chiefly in the way the government again is treating the Algarve with distain and contempt by not releasing full details of the current deals, by avoiding an Environmental Impact Assessment, by keeping a political lid on the local majors and its MPs, by having no stated emergency strategy for a serious oil leak which easily could halve the region’s tourist income while crucifying its carefully structured image as the premier beach destination in Europe. 

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-5 #3 dw 2015-06-12 15:59
Since Portugal is now an IMF debt colony there is probably no way for the Portuguese Government to avoid this kind of thing short of following the Greeks and refusing to repay its (odious) debts. Democracy in Portugal is mostly, as in the rest of Europe, an illusion.
-4 #2 Peter Booker 2015-06-12 06:50
Good stuff, Ed. The real problem is the lack of mechanism for effective opposition, because the two major parties have a rotational arrangement. Neither will criticise the other because it will have the same problems, and the same solutions, when it next comes into government.

And the party apparatchiks will not oppose from the backbenches, or from the mayoralties. If they criticise or disagree, they will be kicked off the party list, and then pursued through the courts. Macário Correia is a case in point.
-4 #1 liveaboard 2015-06-12 06:45
The lack of transparency is a recipe for corruption.
The Portuguese government has a culture of secrecy in practically everything, only announcing plans or changes at the last possible moment [if then].
By the time questions can be asked, the deals are signed and any motivating factors that influenced the decision makers is swept under the rug / shuffled through several accounts.
All these contracts should be a matter of public record.

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