Tough Questions, Few Answers from Belize Natural Energy | Fri, November 30, 2007 | |
Belize Natural Energy began pumping oil out of Spanish Lookout in June
of 2005 and last year alone - they produced just under 750,000 barrels
of oil. That is a lot of oil and its making a lot of money - but for whom?
Well we've already reported that the government only gets back about 20%
of the gross in taxes, royalty and production share. So where is the rest of
the money going? Well that's just one of the questions we asked yesterday.
The Ministry of Natural Resources took the media on a tour of BNE facilities
in both Spanish Lookout and in Big Creek. Keith Swift has the story.
Keith Swift Reporting,
Nestled in the foreground of the Maya Mountains - the predominant Mennonite
community of Spanish Lookout was built on agriculture and farming. But in 2007
the cows in Spanish Lookout now graze alongside oil wells.
This is Mike Usher Well #1 where BNE hit black gold back in June of 2005. Since
then this well has been producing between 800 and 1,000 barrels of oil a day.
And that's just in one day and that's just Mike Usher Well #1. There
are four more wells - Mike Usher #2 through to Mike Usher #5. So how much
oil are these donkey heads pumping?
Daniel Gutierrez, BNE' Marketing & Logistics Manager
"BNE produces approximately 3,100 barrels of Belize light crude a
day."
The oil is transported from the wells via a 5 mile underground pipeline to
BNE's central gathering station in Iguana Creek.
Andre Cho, Inspector of Petroleum
"And then the oil comes out through that black line that you see there
beside the blue. If you look carefully you see the blue going like this and
then a black line because yellow is for gas, black is for oil, blue is for water.
The oil comes out and goes into these two big tanks and a tank for local sale.
These 10,000 barrel tank and the local sale tank is 500 barrel tank."
And that is when the oil flowing into BNE is measured. Water oil and natural
gas are first separated. The water is discarded, the natural gas is burnt using
this flare. The oil is measured in barrels using what's called a fuel
gauge. It's important to note that both a representative from BNE and
a geology technician from government is there to verify it - and if don't
believe it - well the geology office has field office on the BNE compound.
Andre Cho,
"The government owns the oil so naturally the government will have
to make sure they know what the production is and the what the revenue is and
that's why we have field station and officers out there that can oversee
the work of BNE. The BNE technicians gauge in the night before they leave to
see how much oil was in there. And then in the morning when they come back to
see how much oil was produced."
And once the oil is measured - it's on the next phase.
The tankers behind me are being filled with light crude oil for transportation
to the Port in Big Creek. These tankers are the last two for the day. About
24 of these leave everyday and each contain 9,000 gallons.
The oil from Spanish Lookout is brought here the Port in Big Creek. It's
a 11 mile drive. Once here the oil is transferred from the tankers into one
of these giant, what are called tank forms. The tank forms have a combined capacity
of 42,600 barrels and the oil leave s Belize on a barge with a capacity of 42,800
barrels. A barge leaves twice a month.
The tank forms have a combined capacity of 42,600 barrels and the oil leaves Belize on barge with a capacity of 42,800 barrels. A barge leaves about twice
a month. In 2006 BNE sold shipped off 714,005.45 barrels of oil. According to
Inspector of Petroleum Andre Cho - the Spanish Lookout oil field only has 11
million barrels - which means it could all be gone in ten short years.
Andre Cho,
"This oil field is about 1,500 acres in size plus or minus."
Keith Swift,
In terms of the oil?
Andre Cho,
"The estimated proven reserves is 11 million barrels but there is
something you must note. You can never produce all the oil out of the oil field
because of just basic physics; some will always stay within the rocks and you
can't just take that out."
Keith Swift,
So given current production, when will this oil field run out?
Andre Cho,
"We estimate that with eleven million barrels of recoverable oil, the
oil field will last anywhere between ten and fifteen years."
Keith Swift,
And how much money would Belize have gotten from it? What would be the money
made from the 11 million barrels?
Andre Cho,
"Well it would simple to estimate. You just have to multiply 11 million
barrels by whatever oil price you want to use. If it is a $100 per barrel, it
will be 11 million times $100."
And of that amount - how much is Belize getting? Well no one really knows.
Cho says that the landowners are getting their share fair.
Andre Cho,
"We have paid the Spanish Lookout community all the royalties that
are owing to them and that was $433,000 which is a considerable amount of money.
This is for the period 1st January 2006 up until the end of the second quarter
2007."
Keith Swift,
And those royalties come from government's cut.
Andre Cho,
"Yes, that five percent comes from the government's royalties."
Last year - government collected 21.9 million dollars in taxes from BNE -
that's roughly only 23 percent of BNE's income of 91.3 million dollars.
We asked BNE's marketing boss Daniel Gutierrez if that seems fair.
Keith Swift,
Last year you guys made $94.3 million and GOB got your $21.9 million, that's
a 23% cut. Do you think that's a return for the people and government
of Belize?
Daniel Gutierrez,
"Look I can tell you that Belize Natural Energy has been producing 'x amount' of oil, we have been producing oil responsibly and along
with the responsible production of oil comes the responsible accounting and
comes the responsible paying of taxation and everything else that our country
with the government of Belize calls for. And I can tell unequivocally that we
have been doing responsible thing and we have been abiding by what the contract
asks us."
Keith Swift,
Government promised 40%, that is the income tax you were supposed to pay. But
justify for me $8 million for transportation as an expense.
Daniel Gutierrez,
"If you settle for a cheap logistic system, the outcome won't
be a nice one so I am pretty, not only comfortable, but I sleep well at night
and that is because the resources are going to the right place."
Keith Swift,
Also you feel comfortable putting down $6 million for new exploration?
Daniel Gutierrez,
"Well like I told you before we started the interview, the financial
figures are best addressed once the audit is over and that is public. It takes
between $1.7 million and $2.3 million to drill a week. That is what it takes.
I sleep well at night knowing that we have top notch drilling equipment, top
of the line personnel and do things the way it should be done."
Keith Swift,
Sir entertainment and travel, you spent $600,000. Can you justify that?
Daniel Gutierrez,
"It is interesting that you choose to narrow down on $600,000. Perhaps
what we could discuss is the $1.7 million or so that is put back into community
projects."
Keith Swift,
Sir but I am saying is that you take this expenses out of your gross receipts
and so that is why the government's take is so little...
Daniel Gutierrez,
"The best thing is wait for the results of the audit, look for the
information and make sure that we're talking the right figures. I am not
going to get into a game of throwing out figures when..."
Keith Swift,
You don't think the people of Belize deserve more than 23% of the million
you are generating?
[Daniel Gutierrez Walking Off]
And since Gutierrez wouldn't' answer - we asked Inspector
of Petroleum Andre Cho.
Andre Cho,
"Since this is the first producer, normally you want to do an audit
after the first year of commercial production and the government has initiated
that process and an auditing firm as begun the auditing of BNE to look at their
gross revenue and their expenses and after that process, we will be able to
answer you for sure what the revenues are and what revenues government has received
and if those are the revenues that we should receive."
And so it seems while BNE continues pumping oil from their 5 wells -
we'll have to wait for that audit.
Some points to note is that to its credit - BNE says it has 398
employees and more than 90% of them are Belizean. They also note the 24 tanker
trucks which transport the oil from Spanish Lookout to Big Creek are Belizean
known. As for the possibility of a commercial find of oil never delay - the
company is still performing tests and remains optimistic.
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