In a surprise move from the Prime Minister’s pro-oil government, the Ministry of the Economy has confirmed that the outstanding tenders for oil and gas exploration have been cancelled.
Seven licences were on offer to companies to allow exploration for oil and gas, and its subsequent extraction from blocks off the Algarve and Oporto shores, but these will no longer be sold or assigned.
The availability of these new licences was announced in September 2015 by the Pedro Passos Coelho administration.
The current Prime Minister António Costa already has made pro-oil statements, such as "it is absolutely essential for the country to know its natural resources and to continue exploration operations" for oil and gas.
The Algarve’s mayors and much of its population dependent on tourism has reacted badly to the discovery that oil rights over much of its sea and land has been sold off.
The Ministry of the Economy has stated that the scheduled launch of the new tenders "is not on the agenda of this government. The competition will not move forward."
In September 2015, José Miguel Martins, the then head of the National Authority for the Fuel Market (ENMC), said he was preparing to offer "four areas in the shallow offshore in the Oporto basin, two other areas in the deep offshore in the Oporto basin and an area in the deep offshore of the Algarve basin.”
"We are still in a relatively early stage, but our intention is that at the end of October, start of November in principle we can move forward," according to Martins.
The oil industry is on a go-slow at the moment with Repsol already having postponed the drilling of its first well off the Algarve coastline due primarily to the low international oil price.
The Spanish company wanted to ‘extend its survey stage’ for a further year to see whether the oil price recovers.
The current president of the ENMC, Paulo Carmona, said at a heated public meeting in Faro in January that oil companies have invested USD58 million in oil research in Portugal and have found evidence of hydrocarbons, although not in commercial quantities.
The oil issue has roused the Algarve’s population which will shouldering the environmental risks of the planned for local oil business. The lack of information on the contract terms with Repsol, Eni, Galp, Partex and Portfuel also has been an issue, as have the miserly royalty rates negotiated by the Passos Coelho administration.
The MP André Silva, representing the People, Animals, Nature political party, already has challenged the prime minister to have the "courage to break with the old paradigm" of fossil fuels and the exploitation of resources that can "completely undermine the tourism sector, particularly the beaches" of the Algarve.
António Costa responded that "there are contracts in place and which have to be fulfilled" adding that "the natural resources of the country are the ones we already know such as the beaches and the Algarve sun, but there also are natural resources that we believe exist and which we need to identify.”
How the PM can ever align the Algarve’s tourism business with an oil industry remains to be seen but the tide may be turning in the oil debate now that facts and contract details have been made available to the public at a time when the government is dependent on the generally anti-oil left wing to keep it in power.