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)

[email protected]

www.ceis-caribenergy.org

continued on page 2/

...rush in the ...rush in the

Caribbean?Caribbean?

CARIBBEAN ENERGY INFORMATION SYSTEM (CEIS)

AUGUST 2012 ISSUE

mailto:[email protected]

http://www.ceis-caribenergy.org

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



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,




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




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

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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


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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.



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

http://cippet.org/information/regional/latest-retail-prices/



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:

[email protected]

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and Subscribe to our RSS Feed

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

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CEIS Petroleum Update August 2012

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