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FAQs: Some Answers to Proposed Oil and Gas Offshore Drilling in Algarve

Here you find answers to some of the questions that we are asked on a regular basis. These should assist you in deciding for yourself whether you are pro or anti oil drilling in our offshore in the Algarve basin and Alentejo basin, by Repsol /Partex (Gulbenkian Foundation),  by GALP/ENI or by Kosmos Energy or any other company that our blinded government deems worthy of an offshore license to drill for oil and gas. Although in this article we focus on Repsol /Partex concessions mainly.

Why is the proposed gas project in Algarve basin deemed unsafe?

Because it is a fact that there are major health and safety issues with offshore gas and oil exploration as well as major environmental risks. Read more about them in the "Industry Related Information" section of the  on this site. We have endeavoured to write about them in simple language so that all of you can get a grasp of what the real risks are.

 

But oil and gas exploration - Creates Jobs Doesn't it? Then why is it Not a Good Thing?

The Oil and Gas industry is a highly specialised one. In the Algarve we lack the skills, we lack the supportive infrastructure for the good paying jobs, or even for any jobs that could be created through sub-contracting opportunities in the industry. When any of the representatives from goverment or the big businesses talk, there is no substance to what they are saying. It is vague ... in fact its "vapouware". If you have any different data that has been substantiated, then we would love to have it.

Until, Repsol/Partex, Galp/ENI, Kosmos Energy, or the government can substantiate their claims, we believe that the only jobs that will be created in the Algarve will be for unskilled and semi-skilled workers, and there will not be many of those neither. As a result, job creation is in our opinion just a misleading carrot being dungled in front of the desperate and the unemployed.

 

Bottom line, people of the Algarve do not sit and believe what they are telling you, because the reality is that in its current scenario there are NO BENEFITS for you in the Algarve from this venture.

 

But the fact is, that most of the local people do believe that their livelihoods are being directly threatened by the Repsol/Partex, Galp/ENI, Kosmos Energy oil and gas exploration projects than by anything else.  Keep in mind that the local economy is based on tourism, fishing and agriculture and those sectors will be negatively affected. Ask yourself, who will buy fish or swim in our waters knowing that there are risks of harmful metals such as mercury and lead in our pristine waters?

Government leaders keep on talking about how many jobs will be created, but the fact is that to date both the government and the Repsol/Partex, Galp/ENI consortiums have failed to state HOW MANY jobs will be created in the Algarve or in Portugal by this project during its various phases. They have further failed to state WHAT TYPE of jobs will be created for the local population. We would love to see what provisions have been made in their manpower planning.

 

Who owns the Blocks 13 and 14 of the Algarve gas - Lagosta and Logostim Concessions?

Repsol, a Spanish company owns 90% and the Gulbenkian Foundation although a Portuguese registered foundation through its 100% ownership of Partex owns 10%, but we must take into account that Partex’s Group management and financial controlling company is head quartered in the Lichtenstein tax haven and not in Portugal.

 

How much MONEY $$$ could the gas reserves in Lagosta and Logostim Concessions - block 13 and 14 be worth?

According to the CEO of Partex Oil and Gas, the reserves are estimated to be at least 20 times those of Poseidon Gas Fields. Taking that information at face value, we can safely put the value of these reserves to be at least €100 billion (€100,000,000,000) – (taking into account the estimated Poseidon fields value of €8 billion), but this is a very conservative estimate. The real figure is likely to be much higher, especially as the global price of oil and gas rises.

But the financial benefit ($$$) for Portugal is non-existent, as royalties are only 10 cents and 25 cents a barrel after all expenses are recovered by the oil companies. Leading one to ask if someone has negotiated this deal without applying their minds nor looking after the interests of Portugal and it's people; or could they have been "motivated" to sign such bad deals on behalf of Portugal through other incentives?

We believe the signing of these two contracts (Lagosta and Lagostim concessions) on its own should be subject to a proper criminal investigation by the relevant bodies into any possible misconduct on the part of the representatives of the Portuguese government - because we don't believe that anyone really looking after the interests of the country would sign such adverse contracts for Portugal.

 

How come Portugal doesn't benefit from the gas if found?  

Because of various reasons. One, because the price is set by the "market". Two: The deals done by our Government with the oil/gas companies meant that Portugal gave away €100 billion of our own gas resources and that the Portuguese people must buy it back at market rate. Three: On top of that, the agreement allows big corp, to writte off all pre-operation costs, including exploration and development. Because the Repsol/Partex consortium is all privately owned, all the profits go to the oil companies rather than to the people of Portugal.

In addition our dear government leaders made damn sure that there is no provision for royalty payments, nor for any shareholding to be retained by Portugal in the contract. Don't you find this arrangement strange?

While people in Portugal are suffering with severe austerity measures and an extended recession, are being told to tighten their belts, to grin and to bear the painful cuts to health, education, social security, salary and pensions - the giant oil companies Repsol/Partex are preparing to remove Portugal’s valuable natural resources and divide the billions of euro of profits between their shareholders.

So the next time you hear a politician defending the Algarve Gas fiasco by mentioning the “national interest”, remember that the Algarve Gas findings actually represents a net loss to the Portuguese exchequer of tens of billions of euro and that it will end up costing you the tax payer to foot the bill at the end of the day.

 

Why is the 'security of supply' claim wrong or misleading?

Because our Government gave away the licences, we have no control over it – the Repsol/ Partex consortium for example, can decide whether it's more profitable to sell it in Europe or anywhere else in the world rather than in Portugal.

 

What is the contract between the Portuguese state and the oil companies? Did the Government really just give it away?

Thanks to the deal made between the not-transparent Portuguese government and the even less transparent multinational oil company Repsol/Partex, the Portuguese government waived any shareholding in the concessions and the royalties are not worth the paper its written on.

According to various economists that we consulted, the amount of tax paid will be extremely low if at all, and taxes will not be paid until many years into the operation of a gas or oil field, because the deal allows the companies to write off 100% of costs (even the anticipated cost of shutting down the operation!) before they declare the profits to be taxed.

In major oil/gas producing countries, the state takes an average (median) of at least 50% of the value of gas and oil not literally 0% of the value.

 

Why do you oppose liberalisation?

Proponents of a market approach always promise cheaper and better services. This is a fairy tale, made up by the companies that make the biggest profits on a market. Reality shows that this means: better and cheaper services for the rich, but worse and more expensive services for the poor. For us this is unacceptable. Competition means that companies have to invest in marketing, advertising and in dealing with competitors, all this money cannot then be invested into the services they are supposed to be providing.

 

Is it your aim to reverse privatisation of our natural resources i.e. gas and oil?

We want a change of focus and a shift in approach towards public resources. The human right must be central in policy formolation, not the demands of the so called "market". Governments also have an obligation to safeguard our natural resources for future generations.

 

Why do you believe that there will be Increased Shipping in the Algarve?

Oil and gas operations, needs support vessels, which mean increased shipping in sensitive areas. Increased shipping means more noise that can mask communications for many species in the ocean and increases the potential for injury of our marine mammals, especially whales and dolphins. It also brings more pollution and a greater possibility of oil or gas and other chemicals spills and associated risks.

 

 updated: May 2016

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