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Tomorrow, protestors from the Citizens Organized for Liberation through Action are going to march through the city streets demanding – among other things - a fairer share of the revenues from oil. Current statistics show that in four years of commercial oil production, the government has collected $104,688,076.69 from oil production. That is a combination of Revenue from Taxation, the 10% Working Interest, Royalty, and Production Share.

BNE, meanwhile, has generated gross revenues of $592,005,368.00 on four million, eight hundred and forty thousand barrels of oil extracted at Spanish Lookout. Last night we incorrectly said that there were 296 million plus barrels extracted when actually that was the revenue in US dollars. Broken down, that means that for every one dollar in gross earnings by BNE, government has collected 17.4 cents. And that’s part of the reason why protestors are taking to the streets tomorrow – they say 17 cents on the dollar is unjust.

Yesterday we spoke to the Director of the Department of Geology, Andre Cho who discussed revenues from oil, and the estimated reserves at Spanish Lookout. His figures we note are different from those presented by the Belfast Telegraph who spoke to Susan Morrice. That quoted reserves of 20 million barrels – he told us that the most recent information to his office shows the reserves at 14 million barrels.

You will note that there is also a discrepancy in the figures for oil revenue that he presents – that is because our figures are inclusive of collections from tax, while Cho could only speak of Royalty, Working Interest and Production sharing receipts that go through his department. Also, the total revenue figure for BNE that he will quote is in US dollars, while ours have been converted to Belize dollars. We begin with his comments on the oil reserves.

Andre Cho, Director of Petroleum and Geology
“The recoverable reserves for Spanish Lookout is 14 million barrels but right now BNE has done a revised report on the reserves and they are supposed to submit the report to us and maybe that volume will go. I know Susan Morrice mentioned 20 million in the Irish media, I don’t know what it is because they haven’t submitted the report. They should submit that by next week. So far though we have produced four million, eight hundred and forty thousand, four hundred and ninety five point one three barrels from the Spanish Lookout field and the current production rate is 4,200 barrels of oil per day.

The gross revenues that BNE has reported in their audited financials for all the previous years, that’s 2006, 2007, 2008, and up to the end of the third quarter 2009 which is up to September 2009, the total gross revenues was $296,002,684.

Our Department collects the revenues from the government’s ten percent working interest in the field, it collects royalty, and it collects the production share. The working interest that we have collected to date is $6,154,232.00. This is all Belizean dollars. The royalty we have collected so far is $40,124,376 and the production share we have collected so far is $668,842.

When you do a full analysis, a proper economic analysis of the Spanish Lookout oil field, the government’s net take is about 49% or 50% on the entire oil field.”

Jules Vasquez,
“But you said net take.”

Andre Cho,
“That is after you take out the expenditures.”

Jules Vasquez,
“Was BNE being allowed to charge for its exploration cost when that should be an investment cost and not an operating cost, therefore it should not be calculated against our 10% working interest or 10% of the proceeds of the company?”

Andre Cho,
“In regards to recovery of expenditures, by law and by the terms of the contract, and this is common in a lot of countries, the contractor can recover a 100% of their exploration expenditure and 20% of their capital expenditure annually. So during that time, during the exploration period, the government’s revenue will always be lower simply because they have high exploration expenditure because they are trying to invest the revenue into finding more oil which is what we want. And after the exploration period has expired, which in the case of BNE is on January 1st 2011, the government’s revenue goes up because all they have are their general production and other operating expenses.”

Jules Vasquez,
“Do we have the necessary expertise, the wherewithal to accurately and authoritatively review the income statement or the books of an international petroleum firm?”

Andre Cho,
“Yes we have the basic minimum. We need more staff and that is what we are starting to work on. We just got the petroleum accountant in July 2009. He has started his audit, he has requested information from BNE that he needs to start.”

Cho explained that the Geology Department is expanding its capacity and apart from the specialized petroleum accountant post which has been filled there are also vacancies for other technical posts. But, he added that so far, the Department is managing mainly because it is only dealing with one oil company at one oil field – with a second one soon to come under production.