In a separate statement of intent issued this week, first Galp said it was budgeting more than 100 million US dollars for drilling off the Alentejo coast. The Portuguese energy company said prospection would start at the beginning of 2016 by the latest or it would lose a government licence to do so.
This news was then followed by news that Lisbon-based energy multinational Partex would be sinking its first deep-water well off the Algarve coast during the course of 2015.
The Capital Market’s Day in London was the stage for Galp Energia to disclose details of oil prospection it plans to initiate at three different blocs along the Alentejo coastline.
Galp explained that the consortium, lead by Italian energy giants Eni, will start with deep off-shore prospection probably in late autumn or in the winter. However, its investment, which Galp chairman Manuel Ferreira de Oliveira said would cost “more than 100 million US dollars”, is estimated to only have a 20 percent chance of unearthing crude from beneath the Atlantic seabed.
Despite these low expectations, Ferreira de Oliveira said: “Let’s see if nature helps us.”
However, and even if mother nature lends an ironic hand, “oil production should only commence in the middle of the next decade.”
Meanwhile, Partex, the Fundação Calouste Gulbenkian’s oil company, admitted this week that as a result of crude falling by more than 50 percent in the past six months, it would be reviewing some of its oil prospection projects, but the Algarve remained on its list of targets.
In comments to Dinheiro Vivo this week, Partex chief António Costa e Silva revealed a series of cuts would be implemented but drilling in southern Portugal would escape self-imposed austerity.
“In Portugal, we are working along the Algarve coastline and everything remains on track and as has been forecast. We are going to drill the first hole this year”, he pledged.
Besides the lack of environmental impact studies in both the Algarve and Alentejo, and ecological concerns expressed by interest groups over oil prospection, financial considerations have also been highlighted.
According to the deal signed by the Partex-Repsol consortium in the Algarve, the licence cost 286,000 euros. Profits, if there are any, would be divided between the companies and the state, with the latter receiving 9 percent.
One of the areas for drilling is expected to be located around 8.5 kilometres from Faro. Standing at the water’s edge, the horizon is located about five kilometres away. However, the height of gas towers will make them and the flames they emit visible from several of the Algarve’s beaches.
The areas in question, which cover more than six thousand square kilometres, known as Block 13 and Block 14, lie between Quarteira and Vila Real Santo António.
Drilling is expected to occur at a depth of 200 metres, with the area off the protected Ria Formosa reserve previously detected as having “promising indications” that oil could in fact exist not too far from the coastline.
The Ria Formosa is one of the world’s largest protected reserves.
Upon an eventual oil discovery, the companies will immediately be entitled to a 30-year exploration period in the Algarve, which could be extended to up to 55 years.
This particular area of the Algarve has already been subject to searches for oil in the past.
In 1974, Chevron and Challenger were awarded short-term contracts, and Esso back in 1980, with minimal results.