CEIS Petroleum Update August 2012
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Transcript of CEIS Petroleum Update August 2012
A ncient history tells us that
Oil was used over 200
million years ago. The
Greeks used it to fight
wars and it has been said that oil was
used to line the basket that Moses was
placed in. Since then, this very precious
commodity has been the cause of many
human ills including wars and political
disputes. Many nations have built
armies to protect their claim once dis-
covered. The Small Island States of the
Caribbean already having little power in
comparison to the rest of the world and
who are predominantly net importers of
the precious “Black Gold” are in no
position to defend their claim against
the Oil giants should there be large
discoveries of this precious
commodity in the Region.
However, finding large
resources would likely see
the Caribbean countries
making a paradigm shift from being net
importers to net exporters. In this issue
of the CEIS Petroleum Update we will
seek to provide a brief history of Oil
discoveries and a summary update on
the happenings in the Caribbean as the
search increases for new resources of
Oil in the Region.
History of Oil discoveries in Major
Oil Producing Countries
It has been recorded that Oil was first
discovered in the United States America
(USA) in 1859. At the begin-
ning of the 20th century it
supplied only 4% of the
world’s energy; now it is the
World’s most important energy
source. Although there is controversy
regarding whether it was the U.S.A.
or Canada that first discovered oil in
North America, it is believed that the
first Oil producing well was discov-
ered in Canada in 1851. This would
suggest that Canada was actually the
first country that discovered Crude
Oil in that Continent.
Large discoveries in the Middle East
were first reported in Iran (formerly
Persia) in 1872. Exploratory wells
were first drilled in Mexico in 1869,
but oil was not discovered until 1901.
Venezuela the fifth largest oil export-
ing country in the World has the larg-
est reserves of heavy crude oil with
the first oil producing well being dis-
covered by Caribbean Petroleum on
April 15, 1914.
Bahrain a small island state near Iran
discovered oil in 1932 followed by its
neighbour Saudi Arabia one of the
World’s largest Oil Producing country
which discovered the precious
resource in 1938. China discovered
their vast resource in the 1950’s.
However, China due to its increasing
population stopped exports in 1993.
CARIBBEAN PETROLEUM UPDATE is a monthly Bulletin which highlights petroleum issues affecting or relevant to the
Caribbean, international developments that may affect the region’s way of life and movements in oil prices and retail prices for fuel regionally.
To access CEIS website
CONTACT US
Caribbean Energy Information System
Scientific Research Council
Hope Gardens, Kingston 6, Jamaica
1-876-927-1779 (Telephone)
1-876-977-1840 (Fax)
www.ceis-caribenergy.org
continued on page 2/
...rush in the ...rush in the
Caribbean?Caribbean?
CARIBBEAN ENERGY INFORMATION SYSTEM (CEIS)
AUGUST 2012 ISSUE
page 2 Call: 1-876-927-1779 | Caribbean Petroleum Update : August 2012
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
Brazil discovered its first Oil well in
1939. However, it was not until 2006 –
2007 when discoveries of large oil
resources boosted the country’s
production levels making Brazil one of
the largest exporters of Crude oil to the
World.
Nigeria the largest Oil producing and
most populated West African state
discovered oil in the Niger Delta in the
late 1950s.
Several other countries in the World
recognizing the importance or benefits
to having their own resources of
Society’s life blood went on the search
to identify their own resources. It has
been recorded that 115 countries have
produced oil in the World.
Discoveries of Oil in the Caribbean
In the Caribbean there are only a few
countries that have had the opportunity
to benefit from finds of this precious
resource.
Barbados was one of the first Carib-
bean Country to produce oil from hand
dug pits in the eighteenth century.
It was in 1896 when West India
Petroleum Oil Company first imple-
mented machine drilling of wells
resulting in commer-
cial production of
over 25,000 barrels
of oil by 1910.
Trinidad & Tobago
had their first find in
1901 and currently
they are the largest
producer of Crude
and natural gas in the
Caribbean.
Suriname another of
the fortunate few, had
their first discovery
in a 30 feet well
drilled in the District
of Nickerie in 1928.
Later in 1965 during
drilling operations for
potable water on a
schoolyard in Cal-
cutta in the District
of Saramacca the
Geological and Min-
ing Service (GMD) encountered heavy
oil in the Miocene interval at a depth of
450 ft. Since then a number of drilling
operations have occurred.
Cuban oil exploration originally
started in the 1960s, with very little
production actually taking place during
that period. However during the 1970s,
the discovery of the Varadero oil field
on the Cuban coast in 1971 increased
interest in oil-related matters.
Belize for more than 50 years has been
involved in Oil exploration efforts.
However it was only in 2005 Oil
production began in Belize with
Is there a Black Gold rush in the Caribbean?...........................................continued from page 1
Fig. 1- World Map showing the World’s largest Oil Producing Countries
Source: http://www.mapsofworld.com/minerals/world-crude-oil-producers.html
Caribbean Petroleum Update : August 2012 | Call: 1-876-927-1779 page 3
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
continued on page 4/
discovery by Belize Natural Energy
(BNE) of a commercial well in the
Spanish Lookout Area of the country.
Efforts to find oil by BNE began in
2002, was spearheaded by two Irish
women and a Belizean engineer, the
small company found oil after most of
the major oil companies had tried and
failed over the past 50 years.
In recent times other countries in their
rush for the most valuable resource in
the world continued or started explora-
tion operations both onshore and
offshore.
Current Oil Drilling or Exploration
Initiatives in the Caribbean
Jamaica
In 2005, the Petroleum Corporation of
Jamaica (PCJ) issued a standard agree-
ment offered to oil exploration firms
for 20 offshore exploration blocks and
four onshore blocks. The agreement
allows 20 years of extraction rights
under a profit sharing agreement for
companies with the PCJ retaining a
possible 12.5%. Of Jamaica’s 20
offshore and four onshore blocks - each
2,500 sq km - eight offshore blocks are
under license. Australian company
Finder Exploration in a joint venture
with Gippsland Offshore Petroleum
holds five blocks and Canada’s Rain-
ville Energy a subsidiary of SAGRES
has three.
Each of the contracts entails five-year
exploration and 20-year production
periods, with an optional 10-year
production extension. The maximum
income tax rate would be 33.3% and/or
a possible tax exemption for a number
of years. It is proposed that several
spinoff industries could be developed
in Jamaica including methanol, fertil-
izer, urea or LNG, among other
products with the gas and if oil drilling
operations are successful.
It was announced by the Sagres (one of
the major companies exploring blocks
9, 13 &14) that the blocks had a
"seismic bump" that could have
substantial amounts of hydrocarbon
(three billion barrels) based on an
independent evaluation of the resource
potential prepared by Chapman
Petroleum Engineering. However, in
2012 after completing the first phase of
exploration, Sagres entered into a
second agreement with the Govern-
ment of Jamaica (May 2012) with a
plan to start drilling in Walton Basin
off the coast of St. Elizabeth in 2013.
This is contingent on Sagres securing
the relevant environmental permits and
finding a joint-venture partner to
undertake the drilling operations.
Belize
Most of Belize’s 8,867 square miles of
territory and much of the waters
offshore have been allocated out in
petroleum concessions to 18 different
companies with a range of foreign
shareholders from as close as the USA
and as far off as Taiwan and even to
companies in the local Belizean arena.
The 18 companies with petroleum
contracts are: BCH International Inc,
BelGeo Ltd., Belize Natural Energy,
Blue Creek Exploration Ltd., Island Oil
Belize Ltd., Miles Tropical Energy
Ltd., Northern Spirit Resources Inc.,
OPIC Resource Corporation (now
abandoned), Perenco Limited, PetroBe-
lize Ltd., Princess Petroleum Ltd.,
Providence Energy Belize Limited,
RSM Production Corporation, SOL Oil
Belize Ltd., Spartan Petroleum Corpo-
ration, US Capital Energy Belize Ltd.,
West Bay Belize Ltd., and ZMT
International Inc.
BNE the only Company to find oil in
Belize, currently produces approxi-
mately 3,500 barrels of crude oil
per day which is sold to Costa Rica,
Panama and the US Gulf Coast. Other
exploratory operations continue in the
country with the hope of finding larger
finds.
Cuba
With a population of over 11 million
people being faced with an over 50
years US trade embargo Cuba could be
considered the Caribbean country with
the greatest need for the most sought of
resource in the World. Being faced
with these realities, Cuba has made
concentrated efforts towards finding it
own oil reserves. The country currently
produce approximately 55,000 barrels
of oil daily, covering almost one third
of its needs, and imports the rest from
Venezuela in return for Cuban doctors
and sports instructors.
In recent times oil exploration has
received considerable interest in
Cuba’s offshore basins. In 2006, Cuba
reported that they had possible reserves
of 20 billion barrels of oil off its shores
in the Gulf of Mexico. It is believed
that such a find could satisfy Cuba’s
domestic need for over 90 years.
In 2011 a Spanish company - Repsol
began drilling in Cuban waters - 55
miles from Key West of the Coast of
Florida. The well is the first of several
exploratory wells planned in Cuba. In
August 2012 it was announced by
Cubapetroleo, a state-owned agency,
page 4 Call: 1-876-927-1779 | Caribbean Petroleum Update : August 2012
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
Is there a Black Gold rush in the Caribbean?...........................................continued from page 3
that the active petroleum system iden-
tified in 2006 by Malaysia's PC Gulf
and Russian firm Gazpromneft does
not constitute a commercial find.
Drilling was carried out off of the
Pinar del Rio coast at a depth of over
15,000 feet using Repsols’ Scarabeo-9
rig.
However, this has not deterred Cuba’s
plans to carry out a three-dimensional
seismic analysis of other blocks in the
coming months. Currently, Venezue-
lan state oil giant PDVSA is to begin
drilling with the Scarabeo-9 rig at a
spot off the Cape of San Antonio,
Cuba's westernmost point.
Sources maintain that Cuba’s Exclu-
sive Economic Zone (EEZ) has
extreme potential for the discovery of
hydrocarbon reserves based on
geological analyses. Efforts continue
towards identifying the Cuban oil to
support the Cuban economy which
continues to be faced with longstand-
ing embargo issues.
Suriname
The government owned Oil Company
Staatsolie has been the major player in
the country’s oil industry. There has
been over 900 onshore wells drilled in
Suriname and Staatsolie recently
entered exploration activities offshore
by acquiring 3,500 km 2-D seismic
data, signed two Production Sharing
Contracts; one with the Spanish oil
company Repsol YPF for offshore
block 30 and the other with the Danish
oil company Maersk Oil. Production
test program was carried out on the
first well CC-16 of the Calcutta field.
Recently oil multinational Chevron
joined the search for oil off the coast
of the Guianas. Chevron announced
that it is teaming up with Kosmos,
which has production sharing con-
tracts with Staatsolie.
In 1982 Staatsolie started to develop
Tambaredjo one of the major produc-
ing oil field onshore Suriname, which
has an estimated 167 MMbbl of
reserves. Currently, the company
manages three oil fields in Suriname:
Calcutta Field, Tambaredjo Field, and
Tambaredjo North West Field in
district Saramacca. Today, Staatsolie
exploration efforts continue offshore
with Cooperation between Kosmos
Energy and Chevron Global Energy in
offshore blocks 42 and 45 of
Suriname.
Trinidad & Tobago
Trinidad and Tobago is major oil
producing country in the Caribbean.
Most of the oil production and explo-
ration efforts is focused offshore, but
the government has been encouraging
onshore field development as well. In
2011, the country produced approxi-
mately 135,000 barrels per day (bbl/d)
of oil, of which 92,000 bbl/d was
crude oil including lease condensate
and the remainder mostly consisted of
natural gas liquids (NGLs).
The two largest crude oil producers in
Trinidad and Tobago are BHP Billiton
and the state-owned Petrotrin, which
each control around 25 percent of
the country’s crude oil production.
Most oil production in Trinidad and
Tobago occurs offshore. BHP holds
exploration and production licenses
covering 904,000 acres in marine
areas off Trinidad and Tobago’s east
coast.
In 2012 Bayfield Energy one of the
exploration companies, in their first
exploration well (EG8 ) discovered
significant amounts of oil and gas off
the south-east coast of Trinidad in the
Galeota block.
The Bahamas
Initiatives to undertake oil exploration
efforts in the Bahamas, was delayed
for over 40 years due to issues
between the Governments of neigh-
bouring Cuba and the Bahamas
regarding maritime borders. This issue
was resolved in October 2011 and
since then The Bahamas Petroleum
Co. has contacted 10 major interna-
tional oil companies about partnering
in its oil exploration operations.
In May 2012 the Bahamas Petroleum
Company (BPC) employed Applied
Drilling Technology International
(ADTI), based in Texas, a division of
Transocean to plan and execute an
exploratory well in Bahamian waters.
ADTI plans to start drilling by the end
of next year and will only provide pro-
ject management services for the BPC.
Guyana
Since 1999 oil exploration licenses
have been granted by Guyana to, Esso
Exploration and Production Guyana
Limited (EEPGL), Century Offshore
Management Corporation and Maxus
Energy Corporation, A Canadian Oil
Company, CGX Energy Inc., ENI
of Italy, Britain-based Tullow Oil, a
continued on page 5/
Caribbean Petroleum Update : August 2012 | Call: 1-876-927-1779 page 5
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
CC A R I BA R I B PP E T R O L E U ME T R O L E U M NN E W SE W S & H& H A P P E N I N G SA P P E N I N G S
BARBADOS
Petroleum gas prices drop >> 20/08/2012
JAMAICA
Jamaican Oil Supplies Secure After Fire >>
31/08/2012
Gas Prices up $2.00 Tomorrow >>30/08/2012
Gasolene retailers take cost-cutting measures
>> 26/08/2012
LNG Uncertainty >> 19/08/2012
JPS Customers to get Rebate for Petrojam
Overcharge >> 02/08/2012
INTERNATIONAL
Oil Prices fall as US Gulf Coast Storm Heads
Inland >> 30/08/2012
Death toll rises to 48 in Venezuela refinery blast
>> 28/08/2012
Oil spill in Curacao >>28/08/2012
YPF, Chevron plot Argentina strategies >>
26/08/2012
Oil slips after 3 straight gains … pump prices rise
>>09/08/2012
subsidiary of Anadarko Petroleum
Corp. of Woodlands, Texas, Ground-
Star Resources, based in Calgary,
Canada and Repsol of Spain. Experts
claim that the Guyana Basin could
hold up to 15 billion barrels of oil and
42 trillion cubic feet (1.2 trillion cubic
metres) of natural gas.
Recent results from CGX Energy Inc.
Eagle 1 well proved to be water bear-
ing instead of oil bearing. Earlier this
year Repsol, a Spanish company, was
forced to cap the well off the George-
town concession after it became
dangerous because of pressure levels.
The abandonment of that well had
dashed Guyana’s hopes for the second
time this year. In addition, territorial
disputes between Venezuela who
neighbours Guyana to the east and
Suriname to the west have resulted in
delays in Guyana’s oil exploration
efforts.
Despite the initiatives, the much
smaller and poorer Guyana still relies
on imports for its energy needs
although its neighbouring countries
have been reaping significant benefits
from finds of oil. In recent times how-
ever, oil companies have shown
growing interest in the north-eastern
shoulder of South America, partly due
to a recent discovery off nearby
French Guiana.
Issues to Consider while drilling for
Oil in the Caribbean
Oil exploration comes with a number
of issues. One of main issue in the
continued on page 6/
IS THERE A BLACK GOLD RUSH IN THE CARIBBEAN? CONTINUED FROM PAGE 4
page 6 Call: 1-876-927-1779 | Caribbean Petroleum Update : August 2012
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
Is there a Black Gold rush in the Caribbean?...........................................continued from page 5
Caribbean is how to combat an off-
shore oil spill emergency. This concern
is more talked about and is considered
to be amplified as oil exploration
moves into deeper water in the region.
Cuba being faced with a strict U.S.
embargo may have difficulty receiving
assistance from U.S. Companies who
are in the business to clean up spills in
such an emergency. Unless these
companies apply and receive special
permission from the U.S. Government
they cannot do any work in Cuban
waters. With offshore exploration in-
creasing, there is need for response
assets like vessels and remote-operated
vehicles in the region. An oil spill near
one Caribbean country can quickly
affect others.
There are also concerns about what
happens to oil skimmed from multi-
national waters and what spill response
techniques can be used. While some
c o u n -
tries tolerate the use of dispersants to
break up crude, others are skeptical.
Countries in a shared basin might
support the plans by a consortium of
companies to deal with a spill.
There are also issues regarding the
conflicting interests of tourism, the en-
vironment and an oil industry which,
while essentially safe, will always
carry with it recognised risks.
In countries like Cuba and Jamaica
other issues arise as well, the appear-
ance of an oil industry, even nearby,
offers much broader economic oppor-
tunity through the huge secondary
economic demand the oil sector creates
for offshore services, storage and trans-
shipment, most importantly, if the size
of the find is big enough, refining and
downstream industries.
Conclusion
Oil exploration in the Caribbean dates
back to the 1800s. Since then oil prices
have risen to levels previously thought
unthinkable, demand for energy has
surged and will continue to in-
crease as the industrialization
and wealth of advanced
economies continues to grow
making the cost of deep sea
recovery viable.
More recently there is an
increased pace at which a
number of global oil corpora-
tions have begun actively in-
vesting huge sums in prospecting
for oil and gas in the Caribbean
Basin. Several exploration licences
have been issued for both onshore
and offshore exploration blocks in
several Caribbean Countries including
Suriname, Guyana, Belize; Barbados,
The Bahamas, Cuba, and Jamaica; and
Grenada. This suggests that there
are possibilities of more than one
Caribbean nation becoming an oil or
gas producer in the near future.
However, Oil exploration and the
business itself comes with challenges
especially for small economies with
small populations. The potential con-
tradictions between tourism, fisheries
and oil and gas recovery have been
recognized and spills and environ-
mental disasters of the kind
experienced in past have made clear
the need for the legal and regulatory
frameworks in all nations in or border-
ing the Caribbean Sea.
If there is a significant find of oil in the
Caribbean then this could be a game
changer. Oil in significant quantities
would also bring significantly greater
political and strategic attention to the
region from the wider world, an issue
that the Caribbean if wise would
address on a regional basis. We must
however, be cognizant of questions
about security, stability, governance,
accountability, the control of corrup-
tion and the management of rapid
change. Of most importance is how we
as a region can capitalize to increase
our own energy security while creating
regional integration and growth of our
economies.
The implications of oil exploration,
finds and spills require sober thought
and careful analysis.
Caribbean Petroleum Update : August 2012 | Call: 1-876-927-1779 page 7
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
REGULAR UNLEADED GASOLINE AVERAGE PRICES AT THE PUMP
August 2012
Retail prices for Regular Unleaded Gasoline in the sixteen Caribbean countries at the end of August 2012 reflected decreases
in prices in six countries when compared to the previous month. Increases in prices were also seen in six countries (Bahamas,
Belize, Grenada, Jamaica, St. Kitts/Nevis, and Suriname) while the other four countries (Antigua & Barbuda, Barbados,
Montserrat and Trinidad & Tobago) saw prices remaining relatively stable.
NOTE:
*US Gallon =
3.785 L
*Imperial Gallon
= 4.546 L
*As at November
1, 2009 MTBE
was phased out
from all gasoline
blends in Jamaica
and replaced with
10% Ethanol.
CHART:
See prices for all products at See prices for all products at See prices for all products at www.cippet.orgwww.cippet.orgwww.cippet.org ...
Regular Unleaded Gasoline Average Retail Price (US$/Litre) 2012
COUNTRIES JAN FEB MAR 8 Mths AVG
APR MAY JUN JUL AUG
ANTIGUA/ BARBUDA 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23
BAHAMAS [91 OCT] 1.33 1.35 1.44 1.41 1.46 1.47 1.46 1.39 1.41
BARBADOS 1.55 1.59 1.66 1.68 1.72 1.77 1.78 1.70 1.70
BELIZE [87 OCT] 1.41 1.45 1.51 1.50 1.54 1.55 1.49 1.47 1.58
B.V.I [87 OCT] 1.26 1.27 1.29 1.27 1.29 1.29 1.29 1.24 1.19
DOMINICA 1.12 1.14 1.19 1.22 1.25 1.30 1.33 1.22 1.17
GRENADA (95 OCT) 1.23 1.28 1.36 1.33 1.42 1.42 1.36 1.28 1.29
GUYANA 1.11 1.08 1.09 1.10 1.09 1.16 1.17 1.07 1.06
JAMAICA 87 Octane[E10] 1.23 1.30 1.32 1.29 1.37 1.32 1.27 1.26 1.28
MONTSERRAT 1.19 1.21 1.29 1.31 1.39 1.41 1.4 1.28 1.28
ST. KITTS/ NEVIS 1.20 1.19 1.32 1.25 1.29 1.28 1.24 1.22 1.25
ST. LUCIA 1.21 1.22 1.22 1.24 1.24 1.25 1.27 1.28 1.25
ST. VINCENT/ GRENADINES 1.19 1.16 1.13 1.18 1.17 1.21 1.17 1.21 1.19
SURINAME [95 OCT] 1.40 1.43 1.49 1.47 1.52 1.54 1.46 1.43 1.45
TRINIDAD/ TOBAGO [92 OCT] 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42
TURKS/ CAICOS 1.58 1.58 1.61 1.63 1.70 1.78 1.68 1.60 1.54
page 8 Call: 1-876-927-1779 | Caribbean Petroleum Update : August 2012
C A R I B B E A N E N E R G Y I N F O R M A T I O N S Y S T E M ( C E I S )
International Crude Oil prices over the three months
period Jun - Aug 2012 saw prices in August averaging
at US$94.6/BBL. When compared to the average
prices seen in June and July, this average price was
16% and 7% higher respectively. The highest average
price seen in August was US$96.2/BBL - seen in the
third week. This price was approximately 2% higher
than the month’s average price and was also the high-
est price seen over the three months period. The high-
est average prices seen in June and July were
US$84.4/BBL and US$90.3/BBL respectively.
Featured Offers:Featured Offers:Featured Offers:
Caribbean Energy Information System (CEIS)
primary report of historical annual petroleum energy
statistics provided for 18 Caribbean Countries.
Included are data on total energy production,
consumption, and trade; overviews of petroleum,
natural gas, electricity, as well as financial and
environmental indicators for over twenty years.
US$/B
BL
76.19
88.14
109.61
38
48
58
68
78
88
98
108
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr Avg
US$
/BBL
Period
Average Monthly World Crude Oil Prices (2009 - 2011)
2009 2010 2011
Subscriptions If you wish to subscribe (free of charge) or cancel your
subscription to the CARIBBEAN PETROLEUM UPDATE, send us an email at:
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Join us through CIPORE on Facebook, Twitter, LinkedIn
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84.4
90.3
96.2
70.0
75.0
80.0
85.0
90.0
95.0
100.0
WK 1 WK 2 WK 3 WK 4 Mth AVG
US$
/BBL
Period
Average Weekly & MonthlyCrude Oil Prices
(June August 2012)
Jun Jul Aug