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2016 Oil and Gas: Galp suspends Alentejo offshore drilling

In a major advancement for anti-oil and gas drilling protestors, the Executive Presidente of Galp Energia announced on Friday July 29th that the company has suspended its plans to drill for oil and gas in the Alentejo basin "without a recommencement date."

The decision is blamed by Galp on the extension of the public consultation process to August 3rd which somehow has disrupted Galp’s planning to the extent that it can not start drilling.

The executive presidente said that, "we had everything ready to start operation and we had to stop."

Carlos Gomes da Silva said that Galp, part of the Galp/ENI consortium already had the Saipem drilling unit contracted and now will have to pay for breach of contract.

Gomes da Silva explained that "at best" Galp can resume exploration next year, but stressed that "in a context of low oil prices, the probability of resuming in high-risk areas is very low."

"Any country competes for investment and it’s important to assess the natural resources to evaluate their economic development potential,"

"Norway has developed that way and it was a poor country of fishermen. I'm not saying that Portugal could be Norway in Southern Europe, but I would have liked it to be," said Gomes da Silva, adding that "the existing concession agreement had a deadline for the completion of the first well in 2016. But due to the extended to public consultation, the consortium already only could carry out the work at the end of the year, which is not feasible due to weather."

On 22 June the Directorate-General for Natural Resources, Security and Marine Services (DGRNSSM) decided to grant a 30 day extension until August 3rd so a proper public consultation could be held for the license application from the Galp/Eni consortium.

Such has been the weight of public opinion that allowing oil and gas exploration drilling onshore or offshore has become a poisoned chalice.

The government may be developing the legal methodology needed to overturn the highly suspicious concession agreements signed by the previous Minister for the Environment, Jorge Moreira da Silva.

An additional reason for the suspension has been Decree-Law 13/2016 of March 9th which transposed an EU directive that insisted that security measures are inplemented “to reduce as much as possible the occurrence of major accidents related to operations of offshore oil and gas are enhanced and their consequences limited,” which in practice meant additional obligations for Galp and its partner, the Italian State oil company ENI.

Anti-oil and gas association, ASMAA's Laurinda Seabra commented:

"A clear case of Galp/ENI counting the chickens before they hatch. Galp’s CEO comment that they had already sub-contracted the drilling operation to Saipem and are bound by contractual terms to pay them is a pill that I’m spitting out, because the license to drill had not been awarded yet and the whole process is still subject to public consultation, which is currently running.

"Does it mean that Galp’s CEO was so sure that it’s lobbying with government would just be rubber-stamped? It sure looks like it. This raises questions about the relationship between Galp and the ENMC and DGRM managements.

"Can we call it a victory? Not at all. It is only a breathing space as they have not indicated that they are pulling out. It is ONLY a suspention."

However, Galp's admission that the process is suspended "without a recommencement date," is a major step forward in this fight to preserve and protect Portugal's natural environment.

 

Source: Algarve Daily News

 Photo credit: Wikipedia Commons

 

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