BRIDGETOWN, Barbados, June 27, 2007 – Four years after ConocoPhillips pulled out of an oil exploration programme with Barbados because of it said the results were unsatisfactory, the government has officially launched another search, with the start of a bidding process for companies to drill for oil in the country’s territorial waters. A local bid was done last week and today, an international bid opens in Texas.
Energy and Environment Minister, Elizabeth Thompson said that a new legal, fiscal and tax regime will be set up to ensure Barbados benefits as much as it can from the oil drilling earnings.
At the same time, Thompson who was speaking at the opening of the Offshore Exploration and Production (E&P) Licensing Round at the Sandy Lane Club House, promised the investors gathered at the launch that government will ensure they receive a reasonable rate of return on their investment. About 25 oil companies from as far as Norway and Russia are in the queue to drill for oil off Barbados. They include Exxon; Shell; BHP Billiton of Australia; Hess Oil Company, Anadarko Petroleum Corporation, Marathon Oil and Murphy Oil, all of the United States; Norway’s state oil group Statoil, Petro-Canada, and Petrobras from Brazil.
They’re all trying to get a chance to explore in the about 70 000 square kilometres of Barbados’ territorial space, located on the shelf and in deepwater areas in the Northeast Caribbean Deformed Belt. That has been divided into blocks and during the Licensing Round, oil companies will get the opportunity to bid on areas which they believe may be of commercial importance.
Barbados’ first attempt at offshore exploration was in a partnership with Texas-based energy company, Conoco (now ConocoPhillips) in 1996. The company invested BDS$50 million in a single well off Barbados in 2001, but pulled out two years later after making no commercial find.
Thompson says once this new effort is successful and Barbados strikes oil, the money from two of these 26 bid blocks will be used to start a Petroleum Heritage and Stabilisation Fund. Although not giving further details about the fund and insisting that more will be revealed in due course, the energy minister said it would be used to protect the interest of future generations. Similar funds have been established by other oil producing nations, including neighbouring Trinidad and Tobago, to insulate fiscal policy and the economy from swings in international oil and gas prices and to accumulate savings from the country’s exhaustible assets of oil and gas for future generations.
Thompson also stressed the importance of protecting the environment in the process, indicating that successful bidders must have high safety and health standards and a sound environmental record. She also warned that Barbados’ resources, laws and peoples must be respected.
“Our society, our environment, our economy are to be preserved and protected…We are not prepared to jeopardise our hard-earned economic gains, ruin our classification as a middle-income society, or imperil future generations through recklessness, or unbridled release of hydrocarbons into the environment or petro-dollars into the economy,” she said.
An international launch of the Barbados Offshore Bid Round is being held in Texas, USA today. The bid rounds will close at the end of November and by January next year, the awards are expected to be made.