Did Galp/ENI really give up searching for oil and gas in Algarve?
We learned during the course of Monday morning the exciting news that Galp and ENI had given up their rights to drill for oil and gas off the coast of Aljezur. Our initial response was to jump for joy, and jump we did. We were so excited at the news. It was a definite victory for all the effort that everyone had invested endless hours and resources into.
We just could not believe it. We had all achieved the impossible. What a fantastic start to a week.
But being ASMAA, we never take anything for granted. And as usual we decided to apply our minds to this notice, and as the day progressed we came to the realisation that maybe, just maybe we were jumping for joy too soon.
We at ASMAA do not like to put a dumper on the good feeling of success, but as usual it looks like its up to us to keep people informed. We have learned over the past years that we at ASMAA have been involved in the anti-oil movement to take announcements from the oil companies and the government with a pinch of salt.
Let’s now look at the info that we have
- GALP announces to a group of analysts and the press that they were stopping the drilling off the coast of Aljezur and were abandoning the project all together. We were although surprised not to see a shareholders warning as it is clear that such a decision will have an impact on investors. On the other hand, they did leave a caveat - in that they were not prepared to give any further comments to the press due to the fact that there’s various legal processes in course. Two of them being ASMAA’s class action supported by more than 700 individuals, two associations and the Odemira Council, challenging the government on seven procedural aspects.
- The Minister of Environment & Energetic Transition “João Pedro Matos Fernandes” in a press release later in the day stated that his ministry would not issue any new exploration or exploitation licences, but failed to state for how long this moratorium would last. The Minister further guaranteed that the state would not have to pay any indemnization to the Galp/ENI consortium due to the consortium “abandoning” its contractual obligations.
At ASMAA we looked at the above information with disbelief because:
Looking back, on or about 10 October 2018, the consortium threatened the government with a claim of 4Million Euros, but nearly three weeks later, the consortium just walks away?
Add to above scenario, the fact that about 10 days ago lawyers representing the consortium lodged another set of documents in court with nearly 300 pages with arguments against our legal actions, but less than two weeks later they just walk away?
So we asked ourselves, what type of negotiations could have taken place behind closed doors that led to this change of heart in the part of the consortium?
On 4 October 2018, we came across an interesting press release posted by the University of Algarve in their website, which announced that a collaboration agreement had been entered into between the University and Galp.
Now what is this agreement all about?
As we do not have access to the full agreement between the Marine and Environmental Investigation Center (CIMA – Centro de Investigação Marinha e Ambiental of Algarve University) and Galp, we have to rely only on the University of Algarve press release, which states:
- Galp & CIMA have agreed to share information and know-how in energy resource projects in the areas of environmental, social and economic impacts on sustainability. (Sustainability = economic benefits)
- Included in the collaboration agreement are for example joint participation in local and international energy research projects;
- Creation of mutual benefit information sharing protocols;
- Promotion of “joint projects”;
- Establishment of strategic frameworks for the energy sector;
- Collaboration in energy projects including renewable energy (?).
Now the most interesting piece of information we found in the collaboration protocol in energy projects which includes renewable energy and? … and by omission its clear that it includes Fossil fuels.
Now, let’s play “Devil’s Advocate” …
What if the government and Galp have reached an agreement whereby Galp (and other interested third parties such as ENI for example) will be given an opportunity to drill they much wanted deep offshore well in the Alentejo Basin under the “blessing” of a University driven investigation project? What if added to the “benefits tab” is the fact that "some of the exploration costs" could be paid for by tax payers funds?
Now would that not be a very attractive proposition to the consortium? Off course it would.
How difficult will it be for a University under the guise of “investigating” what “resources” a country has under the often spoken “public interest” claim that the country must know what resources it has, to obtain a TUPEM licence?
Not too difficult one with think, as after all we talking about a higher education establishment, unless the public is aware that this strategy is nothing more than a front to ensure that the drilling goes ahead. Then it will be a different story.
What are the benefits for the government if our analysis is correct?
1. Take the “oil drilling” issue out of the election campaign trail. (After all there’s elections next year)
2. Pacify the public - take the "heat" out of the fight by giving a false sense of safety to the people.
3. Buy time
What would be the benefits for the oil companies?
1. A front (aka a cover) for their drilling activities
2. Reduced operational costs
3. Access to professional resources
4. Better reputation management
5. Not having to deal with civic society anti-oil drilling actions
What would be the benefits for the University?
1. Funding from oil companies and government (we would bet that there would be lots of money)
2. Access to data
We could expand and really let our imagination run wild, but we believe that this brief overview clearly shows why we, at ASMAA are no longer jumping for joy. If we right, expect the fight to get into a new level playing field as we all move into stormy uncharted waters.
A luta continua!