A Portuguese government body announced today that it has launched tenders for oil exploration in the north of Portugal and in the Algarve.
The head of the National Body for the Fuel Market (ENMC) says there is "an international company interested in deep water exploration off the Algarve coastline" and it has therefore started a tender process for further blocs off the Algarve and Oporto coastlines.
Italian oil giant Eni and Galp already have exploration licenses and will drill for oil in the ocean off the Alentejo coast in 2016 while Spain's Repsol continues to look for partners for its existing Algarve exploration bloc claiming already to have invested more than €50 million in the past four years in Portugal’s nascent oil industry.
Eni announced today that it intends to conduct a test well off the Alentejo coast, the first, but has not given a date range, nor the amount the ENI-Galp consortium will spend.
The drilling will take place 80 kilometres off the the coast of Sines with ENI’s Franco Conticini adding, "Next year we will drill a well in the Santola concession” and praising the facilities at Sines as “an efficient structure and is used to working in the energy sector. It will provide good support."
Repsol is looking for partners to search for natural gas in the Algarve. The Spanish oil company was scheduled to start drilling in late 2015, but postponed the start date until October next year with the government extending the license.
"We need partners in the Algarve," said Arnáiz Alvaro Giménez-Coral from Repsol Portugal at the "Oil Exploration in Portugal" conference held today in Lisbon.
"We have an exploration programme that is agreed with the authorities and we will progress according to this agreement," stressed the Repsol official.
Repsol has four concessions in the Algarve, holding these with other companies. In the areas Lagosta and Lagostim, Repsol is seeking partners for the exploratory drilling phase. In the Sapateira and Caranguejo areas the company is looking for new partners to share the costs and the risks.
The new concessions are for six blocs in deep and shallow waters in the Oporto basin and the others are for deep water exploration off the Algarve coastline. The president of the ENMC Paulo Carmona says he already has a company interested.
"There was an international company that expressed interest and so we decided to launch a competition," said Carmona, aiming to get the highest price possible but realistic in the current market that "If we have no candidates, we can at least project the name of Portugal internationally."
José Miguel Martins of the ENMC said that between 2007 and 2013, research projects and oil exploration in Portugal (on land and in the ocean) has represented an expenditure of around 264 million.
The main companies involved are Galp, Partex (owned by the Gulbenkian Foundation which concurrently is running its ‘Oceans Initiative’ to show how wonderfully clean and productive the Algarve’s waters are), ENI and Repsol.
According to ENMC data, of 174 searches, 117 have showed signs of oil deposits, but to date no commercial exploitation has resulted.
Not content with authorising oil exploration offshore, the ENMC also has allowed test drilling onshore with Portfuel last week obtaining licenses for the Aljezur and Tavira areas.
The ecological arguments will not be heard by government as no environmental impact studies need to be made unless onshore fracking is used.
The Algarve is especially sensitive to any growing oil or gas extraction industry as its one industry, tourism, has been carefully built up over the years based on unspoiled nature, clean beaches, clear waters and certainly no oil rigs in sight.
The government is pressing ahead with issuing licenses to anyone that has the money but has signed deals that tie the treasury down to a low point of just 10 cents a barrel of oil in royalty payments, a figure that compares so poorly with other nationally agreed rates of 10% and higher, that suspicion already is aroused that someone has been paid off.
The government claim that 'Portugal needs the money from oil and gas' is valid but already has been discredited as the income for the taxpayer from this industry will be negligible while profits for large oil businesses could be significant.
Partex, a highly promoted 'Portuguese element' in the Algarve consortium in fact is based for tax purposes in the Cayman Islands.
See also: 'Oil and Gas Exploration FAQs' from campaign organisation ASMAA:
There also is an 'anti-oil industry in the Algarve' petition: