The Repsol-Partex oil and gas exploration consortium is preparing to challenge the government's decision to rescind its offshore contract covering an area off Sagres in the Algarve.
The consortium is in talks with the National Entity for the Fuel Market (ENMC), responsible for these contracts, with the next step being a legal challenge to the cancellation of the concession contract as the oil companies consider that the government’s decision has no basis.
According to the ENMC, Repsol and Partex did not meet the deadline to drill the first exploratory well, which was scheduled for October 2016, "without good reason." This was a breach of contract and the government is entitled to keep the deposit of €4.5 million as per the contract.
The consortium says there was no default, because in March 2016 a law was published with new procedural requirements that caused a delay. The companies requested a time extension but the contract was terminated.
On the same day that the Government sent the cancellation letter to Repsol-Partex, it also sent one to Portfuel, the company owned by Sousa Cintra with whom the Passos Coelho government signed two contracts to explore for oil on land across much of the Algarve.
"In the case of Repsol-Partex, there is still a hearing of interested parties going on. Regarding Portfuel, the termination is legally based on an opinion from the Advisory Board of the Attorney General's Office," a source close to the Secretary of State for Energy commented.
This opinion on Portufuel’s contracts is that they are in default, as the company has failed to provide evidence of the civil liability insurance, and that this was grounds for the "immediate termination by the State” - this being a serious breach.
Sousa Cintra disagrees and commented that "there is nothing left to do now. It's for the court to decide," complaining that he is out of pocket.
In March 2016, the ENMC audited Portfuel and realised that it had not delivered copies of its civil liability insurance. The ENMC recommended to the Government that it terminated the contracts.
The Eni-Galp consortium, exploring for offshore oil off Sines, is the only one left operating out of those with licenses covering the Algarve's on and offshore regions.
