Jamaica’s renewed attempt to ascertain whether it has oil or gas in its offshore acreage has been launched with the completion of UK independent, Tullow Exploration’s 2D seismic exercise in an area spanning thousands of line kilometres off the south coast.
Past attempts by Jamaica to interest companies in taking a gamble on the offshore acreage have come to nought but Tullow seems determined to aggressively pursue its exploration efforts, of which 2D seismic is only the start.
It has reportedly agreed to dish out about US$60 million on the effort.
If the 2D survey is successful and exploration and discovery eventually follow, the production sharing agreement (PSA) between the two parties will allow the government to claim between 45 per cent to 48 per cent of output of oil or gas for its own account above the first 50,000 b/d, which all goes to Tullow.
It will take about nine months to process and interpret the data, at which point Tullow will decide how it goes forward.
Oil and gas prices at the time will, no doubt, determine its course of action, since, in a greenfield area like Jamaica, the cost of exploration and development is likely to be much higher than it would in Trinidad and Tobago, for example.
The state-owned Petroleum Corporation of Jamaica (PCJ) is representing the interests of the government in this exercise.
Elsewhere, the Jamaica government is extricating itself from the energy sector, with the proposed sale of its Petcom service station network.
Twenty-four Petcom-owned service stations are up for grabs, plus 14 LPG filling plants countrywide.
The government wants local service station owners to take an active part in the bidding for Petcom and they will receive an extra five per cent on their offers.
At the time of writing, only one local company, Phoenix Fuels and Associates, had actually put in a bid, said to be for about US$22 million. Other bidders were France’s Rubis and Barbados’s Sol Investments Ltd.