What’s the latest on Government’s ambitious offshore oil exploration and drilling plan that was touted, at the launch a decade ago, as a potential saviour for the economy with the promise of a significant boost in foreign exchange earnings to propel Barbados to a new level of prosperity?
It is a most relevant question to pose at this time, given the dire economic circumstances in which Barbados currently finds itself that led a month ago to the imposition of additional austerity measures.
As has been the case with so many other issues, Government’s silence in this particular instance has also been quite deafening. However, in light of the latest efforts to stem the outflow of foreign exchange and push the island’s stock of foreign reserves back up to a comfortable level which, based on the global standard, is the equivalent of three months’ imports cover, the country could surely do with an update from Government on the offshore oil exploration and drilling plan.
The last time the country heard of any major related development was just over a year ago when it was announced that Government had awarded an exploration block off the west coast to Repsol SA, a Spanish company. On that occasion, Prime Minister Freundel Stuart said that the deal represented “another bold step” in Barbados’ journey towards realizing its offshore petroleum potential.
Seeing that Mr Stuart had stated that every Barbadian is a stakeholder in the offshore oil programme, an update would be welcome on what additional developments have subsequently taken place to bring the plan closer to fruition. The bid to develop the island’s offshore oil potential was started in earnest back in 2007 under the former Barbados Labour Party (BLP) administration which announced that 24 territorial blocks were available for bidding.
Admittedly, a major decline in oil prices on the global market subsequently would have in some way set back the momentum. In 2012, Parliament approved two pieces of legislation– the Offshore Petroleum Act 2007-30, and the Offshore Petroleum Taxation Act, 2001-31 — to place the sector on a legal footing and pave the way for the start of exploration.
Three years later, there was a signing of the first two agreements between Government and BHP Billiton, an Australian company, covering the award of licences for exploration within two blocks off the south-east coast.
Prime Minister Stuart said on that occasion: “Signing these two exploration licences will send a clear message to the industry that Barbados is open for business and is serious about the development of its offshore petroleum sector.”
But alas! Almost two and a half years have passed since the award of these two licences. How close is BHP Billiton to beginning drilling? In the case of Repsol, what progress has it made since the award of its licence a year ago? Will other awards be made soon to other companies? The country, we are sure, would welcome an update.
Meanwhile, from various media reports over the past year, it looks as if Guyana’s plans for offshore oil drilling are well advanced, despite issues with neighbouring Venezuela which maintains an over 100-year-old territorial claim to Guyana that includes areas for planned exploration and drilling.
Last March, Exxon Mobil announced a major oil find from exploratory drilling in a 6.6 million acre area known as the Stabroek Block. Esso Exploration and Production Guyana Limited is the operator and holds 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 per cent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 per cent interest.
It was also announced that oil production from another Guyana offshore site — the Liza field — is expected to start in another three years at an initial rate of 100,000 barrels of crude per day in the first phase. Under an arrangement with the oil companies, the Government of Guyana will receive a royalty of two per cent on gross earnings and benefit from 50 per cent of the profits from the sale of petroleum once production commences.
It is our hope that the Government of Barbados will have just as exciting news to share with Barbadians in any update on its offshore oil development plan. Such positive information would definitely help to lift the spirits of Barbadians and renew confidence about the future.