Oil has been found in Belize in the largest quantities yet but don't get too excited, at least not just yet, at this point it's a lot of oil, but not commercial quantities. Lending the event a perhaps inflated sense of moment and grandeur, the Prime Minister opened today's House meeting with the auspicious announcement. We pick up the story from there.
Said Musa, Prime Minister of Belize
"On Saturday July 30th oil started to flow naturally and has been flowing at a constant rate and pressure since, producing an estimated 500 barrels a day."
Sheila McCaffrey, Dir. Belize Natural Energy Ltd.
"Its beyond words, its beyond excitement, its beyond enthusiasm that anyone could ever imagine what we're feeling at the moment."
And while the excitement was great as this over the top photo opportunity indicates, so was the sense of urgency for a public relations victory for a government very much in need of a celebratory hit. McCaffrey, herself very hot and bothered about the find, admitted it's a little early for them to go public.
Sheila McCaffrey,
"We have significant oil to surface and that's the most positive news I could give you today. That is most sought after news all over the world in the oil industry, to be able to bring oil of this quantity to the surface. Now what we have to do is prove that. Its going to take a bit of time because nothing is instantaneous in this industry so we need to be patient because its going to take time to test this well, test all the zones, make sure everything's okay, do more wells, do the same thing, and come back to you and say we definitely have an oil field as opposed to an oil well."
Deputy PM Johnny Briceno, Minister of Natural Resources
"We need to look at the size of the field, which again more studies has to be done, and that is why we have been cautiously optimistic. We believe this is the closet we have gotten to the real thing but we want to keep the Belizean people informed, I think we owe it to them, and that is why we are here today to show to them that we are not doing anything in secrecy and keep them abreast as to every step of the way. What next? Well right now for the next two months the company is going to be doing some analysis, trying to do some long term estimates as to exactly how much oil we have on this oil field.
Yes you are right when you are saying that money is not flowing in next month but once we have that, once its verified in the next few months, it'll start to change the mindset of people, people will start to look differently at Belize, the investment climate will start to change, money will start to flow."
But if and when it does start to flow - how will Belize benefit? PR Marriott is a private company that has invested to make the find and the production sharing agreement of course favors them.
Deputy PM Johnny Briceno,
"1.5% of what they produce goes to government, that is on the production and then you have the royalties and the royalties is based again, was predetermined before anything was done whereby the royalty fee is 7.5% of whatever volumes that they collect, whatever revenues that they get the royalties will be 7.5%."
Jules Vasquez,
It seems a little low, again I don't know how these agreements are constructed worldwide but it seems a little low to get 7.5% and 1.5%.
Deputy PM Johnny Briceno,
"Well certainly you need to also look back at what happened three years ago when we were negotiating. We had already 50 years of experience in Belize and none of them have been successful, at best we were getting probably a few drums of oil per day so that here is a company saying, 'I'm going to put my money,' and negotiated the best deal that they could get for themselves. We also in return, the people at the Geology Department, when they were negotiating they tried to get the best that they can get based on the conditions that we had at that time."
Jules Vasquez,
The benefits that Belize will derive from this are very few because obviously a refinery will not be built here. Its not like the oil that comes out of the ground here is going to sell at gas stations in Belize.
Deputy PM Johnny Briceno,
"I disagree with you because you need to look at it from different angles. First of all whatever benefits that government is going to get directly, you know it goes to the running of the government etc., but also there are a lot of spill-off effects economically that once you start to have an oil industry, there are so many other things that come with that and I am not even talking about the boost that it will give to the economy, the confidence that it will give to the economy. So there are many other ways how a country is going to benefit."
And that could be some time, certainly months, maybe years, and possibly never. But still right now there's much more confidence than oil.
Andre Cho, Inspector of Petroleum
"We had some very good results, oil is flowing freely to the surface."
Jules Vasquez,
In what volume?
Andre Cho,
"Well like the Prime Minister said a couple hundred barrels, I think he said 500 barrels per day is the potential now. But hopefully after we do some long-term production testing, because what we need to do is put down some production testing equipment in the hole, and monitor the well head pressure, the flow rate etc. and that will tell us how big the field is, how many oil there is, how many barrels there is, and how much we can produce per day and at that point we should know whether its commercial or not. If its commercial we start to drill wells at every 40, 50, 100 acre spacing and eventually all the wells will be producing a couple hundred barrels per day which is a total of a couple thousand per day, hopefully for the entire field."
Jules Vasquez,
And that is the best case scenario?
Andre Cho,
"Yes well that's what we are hoping for. So at this point we are not declaring a commercial discovery, the indications are good and we need to study it over the next couple months."
And while a nation waits for boom and prays against bust, everyone's talking about ownership.
Sheila McCaffrey,
"The resources of the country belong to the government and the people of the country and every man, woman, and child in this country shares in this resource."
Deputy PM Johnny Briceno,
"At the end of the day the oil is here, it belongs to all of us so as a government we have to ensure that Belizeans become the true beneficiaries of this asset that we have been blessed with."
Under the production sharing agreement, the property owner, will receive 5% of the production royalties. Of the 50 previous wells opened in Belize history of oil exploration, the previous high yield was two to three barrels a day.
