Oil search--Paulwell says exploration could resume this year

JamaicaObserver.com OLIVIA LEIGH CAMPBELL, Observer staff reporter Tuesday, April 15, 2003

A file photo of drilling being done for oil. Jamaica is taking another go at oil exploration, with technical assistance from Ecuador and Venezuela.

TWO decades after its last serious search for petroleum, Jamaica is to take another stab at oil exploration and is to get technical help for the venture from Venezuela and Ecuador, Phillip Paulwell, the minister with responsibility for energy, confirmed yesterday.

"Having reviewed information dating over the past 20 years, we have decided that it is worth pursuing, based on our finding so far," Paulwell told the Observer. "Ecuador and Venezuela have offered technical support and guidance, and based on the advice given, the ministry will vigorously pursue exploration efforts using private sector investments." PAULWELL... we have decided that it is worth pursuing

He declined to name the private sector companies with which Jamaica is talking for this new round of oil probe which is likely to concentrate on areas off the island's south coast, although the minister did not give specific geographic location for the search.

Proposals are soon to be reviewed by the National Contracts Committee (NCC) and it was possible that activity could start during this fiscal year, Paulwell said.

In 1981/1982 a consortium of an American oil company, Union Texas, and the Italian state oil company, sunk an exploratory well in Pedro Banks, 50 miles off the island's south coast, which the Petroleum Corporation of Jamaica (PCJ) had divided into five blocs to be auctioned as concessions.

Although Jamaican officials at the time claimed that the Union Texas/Agip had been encouraged by their finding in their Arawak bloc, the consortium packed up without exercising its option over its second bloc, called Bonito.

PCJ itself, in the early 1980s, drilled three on-shore wells on the island's northwest coast in Westmoreland. These were declared to have shown promise, but not the likelihood of commercially exploitable deposits of oil.

Jamaica had financed its initial hydro-carbon mapping with funding and technical help from the Norwegian Government and Canada's PetroCanada. In the mid-1980s, the Norwegians financed further seismic and geological mapping in the west, north and eastern sections of Jamaica, but no further exploration took place.

"Many years ago, Jamaica conducted a tremendous amount of research but stopped, primarily because of the cost of doing such exploration," Paulwell said yesterday.

The minister's confirmation of the country's renewed interest in oil and gas exploration came on his return from trips last week to Venezuela and Ecuador to firm up agreements for oil supplies from these countries.

Jamaica, for more than 20 years, has been entitled to up to 16,000 barrels per day (bpd) from Venezuela under the San Jose Accord under which Venezuela and Mexico provide petroleum to a number of Caribbean and Central American countries on a preferential basis. Under San Jose, beneficiaries pay cash for 80 per cent of their supplies and have credit on the rest. But the deferred payments can be turned into long-term loans if the savings are invested in approved development projects.

Additionally, nearly two years ago Venezuela, on its own, extended the Caracas Oil Agreement to a number of regional countries providing additional supplies on terms similar to San Jose.

Jamaica is entitled to 7,400 bpd under the Caracas agreement, but there was apparently uncertainty between Jamaica and Venezuela whether there was an automatic annual roll-over of the agreement or whether it required new negotiations.

Paulwell said that the Caracas pact was an "evergreen" agreement which was automatically renewable annually.

Jamaica gets 60 per cent of its oil supply from Venezuela and last year when strikes aimed at ousting President Hugo Chavez shut down Venezuela's oil production for several months, Jamaica turned to Ecuador for supplies of 12,000 bpd.

Venezuelan oil shipments to Jamaica are to resume in June, coinciding with the re-opening of the 35,000 bpd Petrojam refinery, which is now closed for maintenance.