Algarve resumes oil prospecting

OIL EXPLORATION is set to resume along the Algarve coast, following a decision by the government’s Economy Ministry.

The Instituto Geológico e Mineiro (IGM), the geological and mining institute, first launched oil exploration in 2002, awarding contracts to a consortium formed by Spanish firm Repsol Exploracíon SA and German firm RWE Dea AG. The contracts were expected to pave the way for so-called “deep-offshore” oil prospecting in two channels of water off the Algarve coast, but Economy Minister at the time, Carlos Tavares, later cancelled the process, after allegations of misconduct on the part of IGM. Thus, agreements were never ratified. The original contracts gave the consortium the rights to oil prospecting in the areas concerned, cornering 75 per cent and 25 per cent of the market respectively. The firms won concessions for two 3,000 square kilometre stretches of water between Quarteira and Vila Real de Santo António, known as blocs 13 and 14.

Repsol and RWE were the only companies to apply for tenders launched by the Economy Ministry in July 2002. At the time, a total of 14 blocs of water were also available. Other companies expressed an interest but none advanced concrete proposals because Portugal has no history of profitable oil production.

Esso and Chevron won past contracts

Although exploration in Portugal has not proved particularly lucrative, oil prospecting dates back to the 1950s when 1,600 barrels were extracted from wells in Torres Vedras. There are also oil wells in other areas such as Leiria, Figueira da Foz and Porto.

Several firms, notably Chevron and Challenger in 1974 and Esso (Standard Oil) in 1980, won contracts to search for oil in areas that are now included in blocs 13 and 14. But, in the end, none reached the commercialisation phase.

Macário Correia, president of the Algarve’s Junta Metropolitana (regional assembly), has expressed doubts about the existence of profitable oil resources in the region, but concedes that if it were confirmed, it could reap considerable advantages.