The Former Environment Minister Jorge Moreira da Silva (pictured left) appeared in front of the joint committee of the Economy and the Environment on Thursday evening to offer his views on oil and gas exploration in the Algarve and explain the background to its chosen partner - Portfuel.
Moreira da Silva was the man who signed the controversial Algarve concession contracts, specifically the one in favour of Portfuel Petróleos e Gás de Portugal, Lda which has a 40 year lease over 300,000 hectares of the Algarve’s land mass despite having no background in the industry or any specialist employees capable of undertaking the technical work involved.
Remarkably, Moreira da Silva claimed that Portufuel meets the technical, economic and financial requirements for companies applying for concessions for prospecting and exploration of oil, “a decent State uses the same criteria for everybody," he added boldly, despite this not having been the case if using the government’s own contract application criteria.
Portfuel, owned by Algarve businessman Sousa Cintra, (see picture 2 below) has been drilling boreholes ostensibly to find water in an area near Rogil, Aljezur, but this week was ordered by the region’s Environment Agency to suspend operations after environmental organisations and individuals complained that contractors were in fact undertaking deep geological work to determine whether oil or gas deposits lay under the surface and were polluting the area with a chemical foam (see picture 3 below) that was leaking into the ground and nearby stream.
Moreira da Silva said, erroneously, that the only concession that Sousa Cintra's Portfuel has is for research and exploration, and not to explore for oil in the Algarve.
The former minister launched an attack on “the Algarve’s retired foreigners” who he accused of acting in bad faith by daring to complain about turning the region into an oil or gas production zone and for wanting to "stop the development of the Algarve."
Criticising certain "interests" that have been firing up the emotions of the population “based on bad faith," the former minister said he found the sudden interest in the Portufuel contract rather surprising as the contract "is similar to the other 17 concession contracts that have been signed," despite his having ignored many of the application criteria.
Algarve based anti-oil/anti-gas pressure groups came in for specific attack by the former minister who complained of a "well-coordinated operation of manipulating public opinion" - music to the ears of Palp and ASMAA which have been doing exactly as the former minister stated by explaining to the public the environmental risks associated with the oil industry and the highly dubious contracts which leave the Algarve shouldering the environmental risks while receiving zero royalties from any future production.
Moreira da Silva said that he was merely "enforcing the law" when he approved the Portfuel concession contracts for the Tavira and Aljezur exploration blocks which he said "cover the Algarve, with the exception of an area around Albufeira."
The former Minister noted that these contracts were all approved by the Direção-Geral de Energia e Geologia (DGEG,) now the Entidade Nacional para o Mercado de Combustíveis (ENMC,) before being received for his signature. In fact there were concerns noted by DGEG management over Portfuel’s suitability as a concession holder as it was a newly constituted company and lacked the obligatory three years track record, or substantial assets should there be an environmental problem due to its operations.
Remarkably, expert opinions somehow were altered at the DGEG and Moreira da Silva was able to sign the contracts in the dying days of the Passos Coelho government.
"The DGEG submitted the contracts for my approval after scrutinising all the financial and technical requirements," said the former minister, denying that there had been any pressure on the body to change its earlier opinion and adding that "the State has used the same criteria for all the concession contracts," which is true but in the case of Portfuel, the State chose to ignore many of the criteria.
An earlier excuse for signing the contracts was that Portfuel was going to take the government to court over the time Moreia da Silva's ministry was taking to sign the contracts.
Moreira da Silva and the former Secretary of State for Energy, Artur Trindade, agreed that the Portfuel contract was awarded for "research, development and production of oil," but both stressed that at each stage of research to production, separate licenses are needed and that Sousa Cintra's Portfuel is permitted only to "undertake studies that do not disturb the ground," a condition that already the businessman has failed to adhere to.
Activists point out that there is little point in oil companies undertaking expensive geological surveys and finding oil or gas if they later are to be prevented from extracting it due to environmental concerns. The government, argues ASMAA, will be obliged to issue further stage licenses and will be under pressure to pass Environmental Impact Studies however damning their content.
An adverse environmental study need not prevent a company from obtaining authorisation to extract, by fracking if requested, as the Minister for the Environment ultimately decides 'in the public interest' what is good and what is bad.
Moreira da Silva stressed that "the environmental issue has been strengthened" in these contracts, because they require that any use of fracking techniques by Portfuel is subject to environmental assessment.
Asked why the Algarve’s two exploration blocks cover many areas of protected land, Moreira da Silva said that the State can not reject the possibility of delivering a concession for mapping the territory as it has "an interest in getting to know its geological resources."
Recognising that local people are concerned about oil exploration in the Algarve region, the former minister said that the fierce opposition to oil and gas development has been led by some "retired foreigners who prefer the Algarve as a land of Indians," but the Algarve also "has the right to development" and he questioned the sudden interest in the concession awarded to Portfuel, claiming that any opposition had been in “bad faith.”
ASMAA’s social media pages have been buzzing with extracts from this evening’s inquiry, especially at the former minister’s comments about retired foreigners who he claims are misinformed “but should have the notion that they are very welcome.”
ASMAA’s leader, with a background in the oil industry, Laurinda Seabra, commented, “I think ASMAA must be one of the biggest nightmares for Moreira da Silva and Co., because it was through the hard work of our association and our foreign and Portuguese friends that most of the foreign resident population was informed and mobilised. I am personally satisfied, it’s gratifying to see this person annoyed that this happened ...”
Seabra points out that Moreira da Silva’s claim that no production licenses have been granted is not correct as the contracts state otherwise. Moreira da Silva already has confirmed signing "concession agreements for research, development and production of oil in the areas designated 'Aljezur' and 'Tavira'."
João Vasconcelos of the Left Block was part of the committee and asked Moreira da Silva why it is important to know the geological resources of the country when any data is subject to a confidentiality clause in the contract.
André Silva from the PAN party said that there are many tribes of ‘Indians’ that have been decimated by the sort of oil development that the former minister is now defended to the commission.
Jorge Costa from the Left Bloc said that "Moreira da Silva’s government has behaved in this process like a husband who speaks out against domestic violence and goes home to beat his wife. It's not enough to talk about combatting climate change and reducing emissions. We must stop drilling into the earth and extracting more fossil fuels for the exclusive benefit of private entities."
Costa added that he had read the contracts and could hardly believe what he was reading "The remuneration for the State for these concessions has no correspondence with international standards that can serve as a reference,” adding that the royalty rates were ten to twenty times lower than international norms and asked the former minister whether he considered it reasonable that royalty rates received by the State from granting half the Algarve’s territory could be about €20,000 per month, "an amount per square kilometer 200 times smaller than that earned by Norway for example? "
Moreira da Silva failed to impress and by criticising the right to peaceful demonstrate has shown his irritation at being exposed. His methods are from an old style of Portuguese government where uppity foreigners were not part of the picture.
The Portufuel contract should never have been signed and the inference is that the technical experts who at first recommended that Portfuel should not be awarded the contracts were pressurised by Moreira da Silva to change their minds.
The lingering question is why was it so important that an unknown company, run by one of Portugal’s millionaire business elite, should be awarded the concession to own the Algarve’s underground oil and gas resources for the next 40 years?
Should Portfuel find oil and gas reserves in the Algarve, the financial rewards will be huge and Moreira da Silva's signature on the contracts will have been worth the bung that many assume he was given to sign the document.
The Algarve's activists have done an exemplary job in both seeing off the illegal Portufuel drilling in the western Algarve and in highlighting the very real threats to the Algarve region which is dependent on tourism and overwhelmingly does not want to be involved in the risks involved in an oil and gas extraction business.
Committee of the Economy and the Environment, April 2016
