In a damning analysis of the detail of the contracts signed between the Portuguese state and oil companies, the treasury is set to receive between just 10 or 25 cents per barrel of oil, or gas equivalent, should hydrocarbons be extracted off the Algarve southern coastline - whatever the international oil price.
The controversial and restrictive contract disadvantages the Portuguese public but was signed on behalf of the nation by the Secretary of State for Energy, Henrique Gomes Cabral in October 2011.
With exploration drilling starting in October 2015, despite earlier denials by oil company bosses, the implication now is clear - should there be oil or gas in commercial quantities, the taxpayer yet again has been shafted by Portugal's business sector which has too cosy a relationship with government.
This raises suspicions that those involved did not have the public benefit in mind when signing the deal that gives away the Algarve's possible oil or gas wealth. If the oil price is €100 per barrel, at 10 cents commission, the treasury could end up receiving just 0.1%.
Angola by comparison receives a legal minimum of 10% commission from oil companies extracting oil from Angolan territory, one hundred times the commission for oil extraction off the Algarve's coast.
For a list of royalty rates paid to oil-rich nations, see: http://www.loc.gov/law/help/crude-oil-royalty-rates/index.php - Algeria 20% of gross value, Colombia 8-25% of gross value etc - you get the picture that 10 cents oer barrel is an appallingly low royalty which hints at either gross stupidity on an astounding scale or that whoever signed the contract was 'compensated' in other ways.
Part of the Algarve exploration contracts contain an agreed clause that, come what may, the contract can never be altered thus saddling the taxpayer with inconsequential financial returns while putting the Algarve coastline and ocean at risk of environmental damage, oil spills, a fall in tourism revenue and a sharp decline in property prices.
Algarve based environmental campaigners ASMAA reports that its experts have read and re-read the contracts and have identified the specific clauses that are of deep concern.
ASMAA’s conclusions are reproduced below as Portuguese pro bono lawyers pore over the detail as a precursor to making a formal injunction.
The claim is that the state, in the form of Secretary of State for Energy, Henrique Gomes Cabral, clearly failed to protect the interests of the Portuguese people when agreeing and signing a deal that so obviously favours the oil companies. The returns the Portuguiese treasury can expect are miniscule – just 10 or 25 cents a barrel whether the international oil price is $50 or $150.
Both the Lagosta (2012) and Lagostim (2011) contracts were signed on behalf of the Secretary of State for Energy, by Henrique Joaquim Gomes representing the government and the people of Portugal.
The secretary of state knows how energy companies work and will have been well aware of the sorts of contracts they try and get away with.
Other signatories were oil man Manfred Böckmann of German energy giant RWE which later pulled out of the deal, Max Antonio Torres who then was Manager for Europe & North Africa Exploration, Repsol SA and is now the Vice President - Exploration at Ecopetrol SA., and our own António Costa Silva,(Lagosta only) the President of of Partex Oil and Gas Iberia which is owned by the Cayman Islands company Partex Oil and Gas (Holdings) Corporation.
In a Lusa news report in 2011 António Costa Silva re-stated that Algarve’s offshore area could be rich in gas and supply Portugal’s needs for “between 12 and 15 years.”
Silva claimed that offshore drilling would save the country around €1 billion from its energy bill and played down concerns from tourism industry chiefs.
“These worries are acceptable, but they have no basis. There are no black tides caused by gas exploration projects because it simply evaporates when it reaches the surface,” said Silva who referred only to gas and to the coastlines of Spain where there had been no problems. He did not address the problems of oil exploration and oil spillage off the Algarve's tourist beaches.
Even if the population of the Algarve wanted to act as host to an oil or gas business, which inevitably would disrupt tourism and the ecology of the area, the deal signed by the government could politely be said to be biased in favour of the oil companies.
There remain serious doubts as to the intention and/or the ability of the Secretary of State for Energy, Henrique Gomes Cabral, who is a former energy man with presumably an in depth knowledge of the industry and its contract norms.
The deal signed by Cabral did not represent the best interest of the Portuguese people. In fact it represents them so badly with a fixed income of 10 and 25 cents per barrel of oil (or gas equivalent,) with no ability ever to renegotiate this figure, that a legal challenge is to be mounted to halt exploration.
The ideal would be that an external inquiry finds out what was behind the deal and if any untoward payments were made by the oil companies to those in charge at the time.
Analysis by ASMAA
Algarve based eco-campaigning organisation ASMAA has looked at the deals and in the links below, explains the two exploration and extraction contracts for the exploration fields off the Algarve coastline - 'Lagosta' and 'Lagostim'
These links are well worth reading as they explain the basis of the deals the government has entered into on our behalves
Click here:
Lagostim contract - ASMAA commentary
Lagosta concession - ASMAA commentary
There also is a petition below for you to sign if you do not want the Algarve turned into an oil or gas field, on shore or on land.
Official Petition to be delivered to government, click on: 'SAVE THE ALGARVE FROM OIL AND GAS EXPLORATION'
Addendum
Original contract with REPSOL/PARTEX Lagostim concession
Addendum to the contract with REPSOL/PARTEX - Lagostim
http://asmaa-algarve.org/index.php/en/campaigns/oil-and-gas-in-the-algarve/current-contracts-with-oil-companies/download/39_dc64253d6b704a5ad29c61f4da1d5260
Original contract with REPSOL/PARTEX Lagosta concession