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PM insists oil and gas exploration will continue in the Algarve

antoniocosta3The MP for the People Animals and Nature party (PAN) had some well aimed questions for the Prime Minister in parliament today, asking António Costa’s view on the oil and gas exploration and extraction plans for the tourist-dependent Algarve region.

"There are contracts in place that have to be met. There is exploration that should be done," stated the PM, adding that it is absolutely essential for the country to quantify its natural resources and to continue the exploration for hydrocarbons in the Algarve.

The Prime Minister guaranteed the Government will see the exploration work continue.

André Silva from PAN said the oil exploration concessions meant "totally mortgaging our tourism industry, including our beaches," and challenged the government to have the "courage to break with an obsolete model reliant on fossil fuels and the exploitation of resources that will damage tourism - the sole driver of the region’s economy.”

António Costa said that "there will be an assessment of the costs and benefits of any step that may be taken in this matter," yet none exist despite some of the contracts being four years old.

The exploration phase, should it prove oil and gas reserves are available, inevitably will blend seamlessly into the extraction phase with Environmental Impact Assessment submissions paid for by the oil companies, being nodded through. The oil comopanies expect to go live in 2020, if there is oil or gas in viable quantities.

Repsol already has spent over USD50 million on marine survey work so, when it comes to extraction licenses in 2020,  the image of a government agreeing that the impact on the environment will be anything but benign is unthinkable.

In the light of Paris 2015 and Portugal’s undertaking to reduce its reliance on imported fossil fuels, the Prime Minister’s responses today were myopic and indicate that he too has been drawn in by the false promise of jobs "like in Aberdeen" and untold wealth.

Should Algarve and Alentejo oil be landed in Sines, the price paid at the processing plant should be little different to the international price at the time. The government's claim of "saving money by not importing oil" will go hand in hand with spending money paying the oil companies for oil to be landed at Sines.

Any profit will stay with the oil companies, only two of which can lay claim to being Portuguese - Galp and Portfuel as Partex is based in the Cayman Islands.

Repsol already has said that it will use processing capabilities in Spain and transport any gas found off the Algarve coastline directly eastwards, not touching the Algarve and creating no land-based jobs here. The Galp hydrocarbon processing plant in Sines already exists and can cope with high volumes.

The royalty rate payable by the oil companies to the Treasury is on the far side of risible at between 10 cents and 25 cents a barrel, compared to other sovereign deals starting above USD5.00 and rising into the teens.

The oil companies’ excuse for this paltry rate is that they don’t expect to find anything so their exploration money is likely to have been wasted.

Not once has the current or the last government published an economic model at different oil or gas production volumes that show the financial benefits to the country at 10 cents a barrel. This may be an embarrassing project as 1,000 barrels of oil will bring the Treasury just €100, but only after all exploration and set up costs have been paid off.  

The Algarve is in the early stages of serious revolt over the exploration for oil and gas onshore and onshore, and remains unimpressed by Portfuel’s owner Sousa Cintra informing the media that he is acting “only for the good of the Algarve,” which patently is not the case.

The region’s mayors and business groups now are aligned to pressure groups such as ASMAA, and environmental organisations. The government seems determined to set itself up for conflict with a region that already feels marginalised, patronised, lied to and belittled by Lisbon - Socialist government, or no Socialist government.

Today’s answers by the Prime Minister show a lack of depth to his thinking and an uncharacteristic lack of political sensitivity, especially in the light of the drubbing received by the head of the government’s Fuel Authority when chairing a public meeting in Faro earlier this week.


See the questions and answers in parliament, in Portuguese, at -


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