As Portugal’s government and National Fuels Authority continue to claim that oil and gas companies’ activity off the Algarve’s coastline is merely exploratory and nothing has been found that would be worthwhile extracting, Repsol has kept quiet about a huge gas field off the Algarve's coastline that it discovered sometime between October 2011 and January 2013.
The boss of Portugal's 'Entidade Nacional para o Mercado de Combustíveis,' (ENMC) Paulo Carmona, all along has tried to play down oil company activity as being 'merely exploratory with a low chance of success' and stated in January 2016 that there has yet to be any discovery that would be economically viable.
Either, Paulo Carmona has been misled by Repsol, or he is lying - Repsol certainly has been lying to the public for several years as it knew of the gas field before signing a contract with low royalties, as did its junior partner Partex, the royalty rate being based on the purported unliklihood of finding hydrocarbon deposits and the high costs of surveying vast tracts of ocean floor.
Carmona was questioned on January 12th, 2016 at a fiery public consultation in Faro as to whether there had been positive indications of hydrocarbons off the Algarve’s coastline. Carmona did not answer the question in detail but relied on his standard assurance that 'nothing has been found that was worth extracting' and that everyone should calm down.
At the same event, Max Torres from Repsol was questioned and also failed to provide a full answer indicating only that nothing was conclusive from the work already carried out and that due to contract obligations, Repsol would be drilling an exploratory well this year, but nothing was definite.
Nonetheless, on January 29th, 2014 during the 'Exploration Day 2014' investors briefing hosted by Repsol on its current worldwide operations, Max Torres, Repsol's Director of Exploration for Europe and the Middle East, stated that Repsol had discovered a major gas field off the Algarve coast, big enough to match Poseidon in the Bay of Cadiz. Torres disclosed during the briefing that the Algarve find contains an estimated half a trillion cubic feet of recoverable gas.
Going back to the current stance by ENMC, it is highly unlikely that Carmona could have remained ignorant of the huge gas discovery by Repsol especially as investors had been briefed in London two years earlier.
Prime Minister António Costa said in parliament a couple of days after the infamous Faro public meeting in January 2016, that the government had issued the exploration licences, they were valid and that exploration would continue but only because the State ‘wanted to know what reserves were there, if any.’
Whether Portugal's Prime Minister knew of the Repsol gas field discovery and therefore lied to parliament in January 2016, is not yet known.
Various government officials involved in Portugal's oil and gas exploration licensing process have stated all along that the whole oil and gas scheme is only at the exploration phase so talk of 'discoveries' is premature.
Partex, owned by the Gulbenkian Foundation, on several occasions 'reminded' the government that the probability of success was low while exhorting it to get the licensing process going. The company later admitted to media that already 'enough gas for 15 years' had been discovered by its partner Repsol and as far as extraction was concerned, this was classed as 'low risk.'
This was back in 2010, well before the licenses were signed by Repsol and the government for the Lagosta and Lagostim blocks off the Algarve.
This statement was reinforced in various press reports over a period of time by António Costa e Silva from Partex, with his statement that there are reserves off the Algarve coast sufficient to address Portugal's needs for at least 15 years, as the size of the discovered field (Lagosta / Lagostim concessions) is twenty times that of the Poseidon field in the Bay of Cadiz.
The recurring question,"'why do these companies want to spend tens of millions of dollars exploring an area where the chances of success are so low as not to be worthwhile?" now can be answered - Repsol had identified a gas field and continued to spend money mapping it, yet failed to mention its highly significant find at the public consultation in Faro in January 2016, or at anytime before, apart from at its briefing to investors in January 2014 when its Director was sufficiently well informed as to estimate total gas reserves off the Algarve coastline.
Repsol’s announcement that it had found a huge gas field was made in a meeting with investors on January 29th, 2014. The briefing by Max Torres of Repsol went like this:
"Portugal, we plan to drill this well by the end of the year or the beginning of next year. Basically this is on trend with the Spanish Poseidon Repsol gas fields here, these are the two blocks here, this is sort of a similar play, you know, Miocene reservoirs. Basically, this is an image of the Miocene reservoirs, Miocene turbidites come in here.
"This is a biogenic play, this is, the contract is excellent, you know we’re talking about half a TCF (trillion cubic feet) type of project here, which is you know enough you know to make this project economic. So, this is called the Carolinga prospect, we’re planning to move ahead with this project, as I say by the end of the year. Very clear image of the turbidite Miocene channels going across the prospects. This is just a sketch, this is a sketch that you have in your books… "
Repsol may claim that it is under no obligation to inform the government or the public of its 2013 (or earlier) find. Repsol signed the contracts for the Lagosta and Lagostim blocks at the end of 2011.
This gas field find may explain why the government has been so adamant that the exploration for gas and oil must progresses without interference or inconvenient public consultation. Ministers may have been informed by Repsol that there is a huge gas field off the Algarve coastline, but nobody wants to be the one to let the Algarve's residents know.
If this gas field exists, and there is no reason to suspect that Repsol is trying to dupe its investors, the company’s processing plant in Spain can be used to handle the output.
This means zero shore-based jobs in the Algarve, with the region ending up carrying risks from pollution, visual impact, sub-sea noise impact on marine life and further curtailment of the Algarve’s fishing areas - all the downside risks that environmental pressure groups and the region's residents have been concerned about.
Repsol and Partex do not have to pay a royalty to the Portuguese government until they have covered all their easy-to-manipulate exploration and production set up costs, and even then the royalty rate is between just 10 cents and 25 cents for each barrel equivalent.
During the exploration phase Repsol can start work at any time it decides without the need to commission an Environmental Impact Assessment and without further public consultation, as only once the field goes into full production will it have to do so.
What is certain in this new development, is that Repsol discovered a large gas field which was announced by Max Torres, Director of Exploration for Europe and the Middle East, to investors in London on January 29th, 2014.
The gas field had been referred to by Partex, yet Paulo Camona from the National Fuels Authority has assured the public that there have been no oil or gas finds off the Algarve's coast, or anywhere else in Portugal's territory. Partex therefore knew of the gas field before the soft contracts were signed with a complicit government for the blocks that the company knew contained the gas field.
Since this date, Paulo Carmona, the president of Portugal's 'Entidade Nacional para o Mercado de Combustíveis' has either been trundling on in ignorant bliss, or has known of the Repsol find all along and has been lying to the public.
