Home' Trinidad and Tobago Guardian : June 5th 2014 Contents JUNE 2014 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Australian outfit BHP Bil-
liton has acquired a 70 per
cent stake in BP's two
deepwater blocks leaving
the country's largest gas
producer with a 30 per
cent interest in TTDAA 14 and 23 (a).
This has been confirmed by bpTT, which
has also confirmed it has approval for the
change in share ownership from the Ministry
of Energy and Energy Affairs and approval
for BHP to now become the operator on
In response to a series of e-mails from
the Business Guardian, the company
responded by saying, "BP confirms that it
has completed negotiations with BHP Billiton
and received government approvals on a
farm in of an interest in deepwater Blocks
TTDAA 14 and 23(a). BP was awarded 100
per cent interest in these blocks in May 2012
and the conclusion of the deal between the
two companies will see BHP Billiton acquir-
ing 70 per cent equity in the two blocks
with BP retaining 30 per cent equity. BHP
Billiton will also assume operatorship of the
The e-mail continued, "The farm in pro-
vides an opportunity to maximise synergies
with BHP Billiton's deepwater operations
in contiguous blocks. BP remains committed
to Trinidad with a growing portfolio of
exploration, appraise and development
opportunities in the Columbus Basin iden-
tified through the interpretation of recently
acquired Ocean Bottom Cable (OBC) 3D
This means that BP is now not taking all
or even the majority of the risk in the two
deepwater blocks and is sharing it with BHP
In July 2011, BP Exploration Operating
Company was awarded 100 per cent inter-
est and operatorship of Blocks 23(a) and
TTDAA 14 offshore the east coast of
Trinidad. Spanning 2,600 square kilome-
tres, Block 23(a) is located in waters aver-
aging 2,000 metres deep about 300 kilo-
metres northeast of BP's Galeota Point
onshore processing facility. The adjacent
TTDAA 14 covers 1,000 square kilometres
with similar water depths.
Under the production sharing contract
(PSC), the company had promised to shoot
its seismic since last year, but did not meet
its commitments under the PSC and was
given the go ahead by the Ministry of Ener-
gy to delay the seismic ostensibly so it can
save costs by jointly shooting it with BHP
Energy consultant Anthony Paul has
been on the record as saying the move is
not in the best interest of exploring what
is frontier basin.
"I am on record as saying that giving all
the first four blocks to a single company
(BHP) wasn't the best way to explore a
frontier basin, as you want to get different
approaches to work for you."
He explained the limited bids can be
taken to mean the blocks are not geolog-
ically attractive. It may also mean the mar-
keting of the blocks had limited impact.
Paul added, "With frontier areas, a strate-
gic, targeted approach to attracting investors
is required. The fact that the winners of
a bid round turns around and farms out
operations leaves one to wonder how much
analysis went into the tender process. T&T
has been down this road before and we've
learnt a few lessons that we would have
done well to apply. I had hoped we would
have done better in the exploration licensing
But energy economist Gregory McGuire
said the farmout will make no difference.
He said what has happened is the com-
panies believe it is best if there is one oper-
ator in the deepwater blocks.
"There are some obvious economies of
scale to be derived from such a decision.
For example, working independently would
mean separate arrangements for drilling
rigs, etc. Working collaboratively means
that the exploration effort can now be
sequenced in a more efficient and cost
effective manner. Lower E&P costs can
mean lower asking price for gas, but that
really depends on whether the companies
are prepared to share some of the savings
derived from this arrangement. I have my
doubts about that. Everything else remains
much the same as far as I can see."
McGuire said if oil or gas is found, then
the agreement between the companies and
the PSC terms will determine the spilt
between the Government and each com-
pany. He said he did not see this arrange-
ment as being disadvantageous to the Gov-
ernment's share in any way.
Repsol SA won government approval to start a
US$10 billion oil drilling project off Spain's Canary
Islands, signaling success in its 12-year campaign to
start exploration near the Atlantic archipelago.
Spain's environment ministry today cleared the
plan with conditions, Deputy Minister Federico Ramos
said in a briefing. The decision follows a reconfirmation
in 2012 of an exploration license first awarded in 2001
and later tied up in court battles. The decision advances
plans by Spain's largest oil company to hunt for fields
in an area geologists estimate may be able to supply
about ten per cent of national demand.
Letting Repsol drill about 40 miles (64 kilometres)
off Lanzarote and Fuerteventura islands, where political
leaders oppose the project for fear of harming the
environment and tourist industry, shows the resolve
of Prime Minister Mariano Rajoy to revive domestic
energy exploration after decades of decline.
Several hurdles remain for Repsol. The Supreme
Court is set to rule June 10 on a challenge to its explo-
Central to the review was whether there are enough
safeguards to stop an oil spill. That's of heightened
concern after the Macondo disaster in the US Gulf
of Mexico. The volcanic islands' beaches, nature
reserves and clear waters off Africa make them a top
draw for tourists to Spain, the world's most visited
nation after the US and France. The ministry said it's
demanding the most sophisticated safeguards avail-
"We've had 267 tests in Spain and never has there
been an accident," Ramos said at the briefing, referring
to offshore exploration wells done over the years.
Most showed poor results.
Spain buys about 99 per cent of its oil and natural
gas abroad; among the highest proportions in Europe.
That's the biggest import cost for an economy emerging
slowly from a six-year economic slump.
The central government's support for offshore and
shale prospecting has collided with an environmental
protection movement that enjoys decades-old backing
from many local governments and conservationists.
Spain is considering opening areas for hydraulic
fracturing, known as fracking, or conventional explo-
ration from the Mediterranean waters off Majorca
island to the emerald Valley of Pas in the north. This
pits a tourism industry that draws 61 million visitors
a year and generates 11 per cent of gross domestic
product against the administration's goal to bring
down a 25 per cent jobless rate.
The Canaries regional government joined with
Fuerteventura and Lanzarote and environmentalists
in a court challenge to the legality of Repsol's explo-
ration permit, granted in 2012 a few months after
Rajoy was elected.
That's when his Popular Party-led national gov-
ernment agreed to confirm, with some changes, Rep-
sol's 2001 permit. The 11-year-old authorisation had
been frozen after earlier legal battles also went all the
way to the Supreme Court. A Repsol spokesman in
Madrid declined to comment on the case on May 28.
"We have little to gain and a lot to lose," said Mario
Cabrera, president of the local government of
Fuerteventura, one of the closest islands to the
prospects, whose dramatic cliffs and remote beaches
helped win it a designation as a Unesco biosphere
reserve in 2009. "Tourism needs a clean sea," he said
in e-mailed remarks.
Repsol forecasts it will produce as much as 110,000
barrels a day should the prospect deliver its expected
reserves of 900 million to 2.2 billion barrels. That
dwarfs today's biggest domestic well in Spain, also
run by Repsol, off Tarragona in the Mediterranean.
It pumps about 9,000 barrels a day. (Bloomberg)
BHP Billiton now has 70% stake
in bpTT's two deepwater blocks
Repsol wins approval
project off Spain
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