Plans by Spanish oil giant Repsol to drill for natural gas off the Algarve coast are to be put on ice following the fall in the price of crude.
Diário Económico reports that the drilling was due to begin in October but that Repsol now “wants to review the strategy” because of its high cost of around €90.1 million.
It is a decision that is being mirrored by oil companies throughout the world which are now throttling back on new projects as profits dive, the paper explains.
In the case of the Algarve, oil and gas exploration is still considered to be “high risk” because no commercially viable discoveries have yet been made.
But while the Algarve looks like winning a reprieve, plans by Portuguese fuel company Galp in tandem with Italian group Eni are still on track for drilling off the coast of the Alentejo, and could start as early as the end of this year, DE adds.
For now, Repsol’s “desire to suspend plans” has not been “formalised”.
According to a report in Expresso, the project “remains in the company’s portfolio” while the “evaluation of investment risk has to be passed through a fine-toothed comb”.
Repsol’s executive director António Calçada de Sá told the paper that these kind of delays are “not abnormal”, and he stressed that drilling for natural gas off the Algarve coast “will not be discarded”.