Offshore Oil Drilling in Belize: Digging Deeper
Special to Ambergris Daily, By Michael Song:
Tuesday June 8 was World Ocean Day, and at the Radisson Hotel in Belize City, it was a day that the Coalition to Save Our Natural Heritage hopes marked the end of offshore oil drilling prospects in Belize. Organized by Ms. Audrey Matura-Shepherd, vice president of Oceana, the largest global organization solely focused on preserving the planet’s oceans, a forum was held to educate the public on the adverse realities of offshore drilling.
It seems to be a simple argument. If there’s the slightest chance at all that Belize could endure even a minor spill, much less that of the BP catastrophe in the Gulf, it would wipe out Belize’s tourism and fishing industries, and thus, pretty much all of Belize’s economy. And, there would be zero resources to recover, leaving Belize a wasteland.
But, at this forum, the public learned there is much more to the story, that the spoils of the former PUP Party remain intact, and that some of the contractual agreements amongst the various entities and the Ministry may not only be fraudulent.
At the forum, there were media, activists, members of the business community, and concerned citizens. Three presentations were given: one on environmental effects by Dr. Melanie McField of the Healthy Reefs Initiative, one on economic effects by Mr. Edilberto Romero, executive director of Programme for Belize, and one on legal considerations by Ms. Matura-Shepherd.
The presentations were impressive and moving. Of course, we’ve all seen the pictures of oil covered, whimpering animals, the closed beaches, and the desperate clean up teams. However, Dr. McField revealed that even without a disaster, routine operations and maintenance of just one oil rig dumps 25,000 pounds of toxic metals per well, including lead, chromium and mercury, and potent carcinogens into the sea, as well as 90,000 metric tons of drilling fluid and metal cuttings over the life of a rig. And, the air pollution from one rig is equivalent to 7,000 cars driving 50 miles a day. This is not to mention the common explosions and smaller spills from routine operations. And, in Belize, the probability of disaster from accidents is significant due to hurricanes and earthquakes. In 2005, Hurricanes Katrina and Rita destroyed 113 oil platforms in the Gulf of Mexico and 457 pipelines.
For example, Dr. McField used the MIDAS Oil Modeling simulator, a software program that visually demonstrates from a topographical perspective the impact of an oil spill. Given various factors, including wind and current data, influence of random wave motion on an oil slick, and volume, a fairly small 20,000 barrel oil spill outside the English Caye Channel between the Northern Barrier and Turneffe, after two hours covered all of Turneffe and reached the shores of Belize City.
And let’s not forget about the economic impact. According to 2007 figures, reef and mangrove associated tourism brings in US $150 to 196 million, counting for 12-15% of Belize’s gross domestic product. The fishing industry generates US $14 to 16 million annually. Furthermore, the reef, which could be virtually eliminated by offshore drilling, protects Belize’s shorelines from damage, and that value is estimated at US $120 to 180 million. In total, the value of Belize’s coral reefs and mangroves amount to an estimated US $395 to 559 million.
In comparison to potential returns, the numbers just don’t add up. In the case of Belize Natural Energy (BNE), which is currently drilling onshore in Cayo, total revenues from 2006 through 2010 were $326.1 million, with the Government of Belize (GOB) receiving $75.8 million, or 23% of gross revenues. BNE claims that the GOB is earning 58% of BNE profits, which sounds like Belize is getting the longer end of the stick. But, the claim is misleading and based on historical figures. The actual deal GOB struck with BNE is actually 40% of net income (revenues less expenses). It just so happened that after all expenses, the GOB’s 40% also equalled to 23% of gross revenues and 58% of profits.
Now, consider the additional costs required to drill offshore, or “exploration expenses”, amounting from US $2.1 to 3.6 million per drill. There is a chance offshore drills may not breakeven until it is too late, and if there is no oil to be found, 40% of zero profits is zero, all while damaging marine life, the reef, and mangroves.
However, BNE projects annual gross revenues at $156 million, giving Belize $36 million. BNE is just one oil company. Now let’s just assume there are four total companies (or half of the eight offshore concessions) that are just as successful as BNE’s projections, generating the same amount of revenue. That means the GOB would still only return US $144 million. And that’s if the oil exists.
In terms of employment, the fishing industry employs an estimated 4,000 Belizeans, and tourism employs 16-20,000. BNE employs 160. It would take 125 BNEs to make up for the fishing and tourism industries’ jobs.
To Mr. Romero, the question remains, “Can the GOB, Geology, DOE, and Nemo come up with US $460 million to save the tourism and fisheries industry in the case of an oil spill?” When asked this question, the audience erupted with laughter.
Now consider the legal implications. For one, Belize does not offer class action law, and in the event individuals are denied land rights or experience unusual damage to their properties, livelihoods, and even physical health due to negligence from the oil companies, only the Attorney General may act on behalf of the group. And who defends the oil companies? The Ministry’s counsel, or, the Attorney General. Thus, the group would have to convince the Attorney General to go to court against himself.
Furthermore, Belize’s Petroleum Act puts all decision making in the hands of the Ministry. For example, while only the GOB can conduct petroleum operations, it can contract private companies if the Minister decides to, and the process for “competitive bidding” is determined by the Minister. However, the Minister also has the power to select contractors without a bid process if he “determines that the circumstances so require”.
As for the contracts awarded to private companies, which are also transferable, the Act conveniently excludes mandates for health, safety and welfare, environmental protection, oil spill contingency plan, training, or anything consistent with international standards for petroleum exploration to minimize harm, except for Section 14, which states that contractors shall use generally accepted practices in the “international petroleum industry”. The maximum penalty for violating Section 14 is US $5,000.
Even more offensive is how the Petroleum Act trumps land owners’ rights. The GOB has the right to drill on private land and give the land owner 5% royalties in exchange, thus allowing the GOB to take one’s land and hand it over to private oil companies. Just the inclusion of such a provision indicates that the oil companies are, at the very least, thinking about it.
One case involves a corporation registered in Belize with contracts for offshore drilling. Through further investigation, Ms. Matura-Shepherd discovered that the corporation of 1,000 shares has two shareholders: one share belonging to Belizean Mr. Alistair King, and 999 shares belonging to a Guatemalan petroleum company, Pedegua S.A. And the designated area for drilling contracted for this company is in none other than the Sapodilla range, the highly controversial and disputed area in Belize, which Guatemala is trying to claim as her land.
That a Belizean national registered this business in Belize and knowingly allowed 99.9% control to a Guatemalan entity is a red flag. According to Channel 5, Ms. Matura-Shepherd comments, “That really to me sends alarms because it speaks loudly and voluminously. By private contract we have circumvented our constitution and given our petroleum rights to a Guatemalan entity.”
The contract was signed in 2004 by the former Minister of Natural Resources, Johnny Briceno, Steve Riley, president of Pedugua, and former CEO and the Petroleum Inspector Evadne Wade, and then amended and signed in 2005 by Andre Cho. The contracts also included the required forms for approval by the government, including a bank guarantee; however, the guarantee was signed but completely blank.
As Ms. Matura-Shepherd commented, “[The oil companies] are raping Belize…and without a condom!”
For years Belizeans have suffered from the adverse effects of government deal-making, leaving the country with irrecoverable damages, from pocketing private sales of islands and other valuable real estate to misappropriating health grants to private companies, all at the expense of the citizens and the opportunity to stabilize the country for growth.
And now one group is stepping up, to prevent rather than idly sit back and lose everything Belize values. The Coalition to Save Our Natural Heritage is progressing smartly. It is leveraging the people’s voices in hopes that the GOB will listen and be able to make completely informed decisions about offshore drilling. The message is clear, objective, and undeniable. The GOB has the opportunity to make changes and save Belize…and help keep mother nature’s best kept secret safe.
The Coalition has initiated a public opinion survey. Make your opinion count and take this survey at: http://surveymonkey.com/s/MC2W9ND
To view the full presentations, click the links below.
Legal Implications
Open Your Eyes
Economics
[...] Let me know if you have any questions. For more info please read the article on Ambergris Daily. [...]