English Dutch French German Portuguese Spanish

The ENI/Galp offshore drilling “cancellation”: Illusion versus Reality?

The Illusion: That Galp has the mandate to cancel the drilling operation. Carry on reading to see what is the Reality.

 

Opinion by Laurinda Seabra (ASMAA)

 

In the midst of all reports in the press regarding the apparent cancellation by Galp of the deep offshore exploration drilling scheduled to have taken place by the consortium ENI/Galp still this year, we need to do a reality check and look at the facts.

 

The Situation

On Friday 29 July 2016, Galp’s CEO Carlos Gomes da Silva said during a press conference that Galp was postponing the first offshore drilling due to an extended public consultation period.

Mr. Da Silva stated further that the contractual terms between the Portuguese government and the consortium would need to be revised if drilling was to be carried out as stipulated in the original contract, as the contract would technically expire on 1 February 2017.

 

According to documents released by the DGRM, the first exploration well was scheduled to start July 1st after a “rhetorical” 15-day public consultation period that would terminate on 22 June 2016 (Edital No 5/2016 TUPEM).

 

This consultation period was extended by the DGRM (Edital No 8/2016 TUPEM) on instructions from the Minister a few hours after ASMAA submitted to the Portuguese Parliament and to the DGRM objections signed by nearly 27,000 people that are against oil exploration in the Algarve.

This submission was further supported by over 4000 personal messages.

Included in the 27,000 signatures were over 4000 signatories that are specifically against the granting of a TUPEM licence to the ENI/Galp consortium.  

The public consultation period was thus extended by 30 days to 3 August 2016.

 

In what we believe was the result of objections raised by ASMAA during the meeting with DGRM representatives in their offices held on 22 June 2016 regarding the lack of public consultation meetings with local population as required under EU regulations, on 6 July 2016 the DGRM announced two public consultation sessions to be held - one on 12 July in Aljezur and another on 14 July in Portimao. (Click here )

 

The Illusion

That Galp has the mandate to cancel the drilling operation, and that the offshore drilling for the first well has indeed been cancelled or even postponed - it has not!

 A clear and typical scenario of appearing TO BE rather than WHAT IS the fact.

 

The Reality

In analysis of the contracts relating to these concessions, and using the Addendum III for the Gamba concession contract as an example, we need to take note of the following:

  1. In Article 1 (Concession), paragraph 2 states that the members of the consortium are jointly responsible for the terms and conditions of the contract, with the exception where in terms of Portuguese legislation currently in place, such responsibility is of an individual nature.
  2. In paragraph 3 of the addendum III, it states that ENI is the principal contractor and official representative of the consortium.
  3. In paragraph 4, the consortium designates ENI to manage and execute all the operations and activities required under the terms and conditions of the concession contract; to submit all Scope of Work documents, project plans, proposals and other communications to DGEG, and to receive all answers, requests, solicitations, proposals, and any other type of communications from the DGEG.

 

According to the contract, it is fair to deduce that ENI is the OFFICIAL appointed body responsible for ALL engagement with government bodies relating to this concession and its contractual terms, and represents the ENI/Galp consortium in Portugal.

This understanding is further supported in Article 23 (Notifications) paragraph 1, which clearly indicates that all communication must be delivered to the offices of ENI in Sintra.

 

In view of above we are of the opinion that Galp’s CEO does not have the mandate to cancel the drilling operation, and what was allegedly stated by him during the press conference was nothing more than the creation of a red hearing in an attempt to divert attention of the populous from the reality.

 

The following further supports above opinion

  1. The DGRM has 30 days from date of final consultation period in which to issue or decline the TUPEM licence to the ENI/Galp consortium. As the public consultation terminated on 3 August 2016,  the DGRM has until September to do so.
  2. ENI has not publicly announced any withdrawal of the TUPEM licence application nor has the DGRM issued an Edital stating that the consortium has withdrawn the TUPEM application.

 

 

Bottom line

1 - There is NO Official Cancelation of the current TUPEM licence application nor is there a request by ENI to cancel this application. Meaning the application is still in force.

2 - The DGRM has until 3 September 2016 to make a decision if they award or refuse the TUPEM licence to ENI

3 - The ENI/Galp consortium has until 1 February 2017 to drill the first exploratory well in the offshore of the Alentejo basin, in the Aljezur sea. But in accordance with Annexure IV of the contracts there is a clause which states:

 

“ Minimum requirements: c) Will be accepted delays in meeting the minimum operational requirements such as seismic surveys, exploration drillings in any of the concessions, when technical or logistical reasons are provided by the concessionary and substantiated in any form or manner. (Examples include lack of availability of equipment, sonar’s, boats)

 

THE  FIGHT against the oil and gas exploration mustn’t just go on,

it MUST INTENSIFY

 

 

Notes:

  1. The role of the DGEG has been taken over by the DGRM - Click here to see video about the changed roles
  2.  You can download below the Addendum to the contract used in this article

 

Download attachments:
You are here: HomeNewsWhat's New?The ENI/Galp offshore drilling “cancellation”: Illusion versus Reality?
  • ASMAA - Algarve Surf and Marine Activities Association
    NIPC: 510 381 952
    Tel: 00 351 282 182 103
    This email address is being protected from spambots. You need JavaScript enabled to view it.
    asmaa-algarve.org
    Rua Dr. Alberto Iria
    Lote 12, R/C Esq
    Porto de Môs
    Lagos 8600-580
    Portugal
Go to top