Belize energy firm strikes oil at right time

Success of Irish exploration entrepreneurs could help lift central American country out of economic stagnation, writes Fiona …

Success of Irish exploration entrepreneurs could help lift central American country out of economic stagnation, writes Fiona Forde.

With petro-diplomacy now driving international relations, and energy clearly the hard currency of political and economic power today, it's hard to imagine a more appropriate time to strike oil. Now, against all the odds, Belize has joined the energy producers of the world and has become the newest exporter of the precious commodity to the United States.

The company behind the initiative is Belize Natural Energy (BNE), a young oil firm that's headed by Belfast-born Susan Morrice, who's joined on her board by fellow Northern Ireland woman Sheila McCaffrey, Englishman Paul Marriott and Jean Cornec from France.

Picking up where more than 50 companies had failed spectacularly in as many years in the past, the four wildcatters began to drill their first well at Spanish Lookout a year ago. Within a matter of weeks, oil of the highest quality was discovered. And within months the company declared the discovery commercial.

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Today, BNE is producing 4,000 barrels per day from its four wells. A fifth is expected to come on stream in the coming weeks while a sixth is in the process of being drilled.

And with other wells planned for the 3,500 acre field, the company is confident that the figure will grow. "At a conservative guess, we could be producing 10,000 barrels per day in the next three to five years," says Ms McCaffrey. "Twenty thousand, if we're lucky."

That may sound like a drop in the ocean when considered in a global context - the world's proven reserves stand at just over 1.7 trillion barrels today - but when looked at in its local context, the find is very significant. Not only will it feed the country's 5,000-barrel-a-day demand and make the former British colony energy independent, it will also drag debt-strapped Belize out of the economic stagnation that characterises much of central America.

But it's not just the quantity that's significant here, it's also the quality of the BNE product. The light sweet crude oil is classed at 41 degrees API (a measurement of oil purity). Diesel in a refined state is classed at 42.

"What we have is something that's only found in a handful of sites around the world," Enniskillen-born McCaffrey explains. "It really doesn't get much better than this."

Because Belize does not have a refinery yet, the oil is currently transported to neighbouring countries for processing, from where it is sold on the international market. As a result, it will be a while yet before the country's 240,000 inhabitants feel the benefits of the discovery in their back pockets.

However, the revenue the government is already earning on exports is significant to the point that it's expected to go a long way towards funding next year's national budget. The positive impact of the discovery has also helped strengthen the Belize dollar and the country's reserves, which is always a challenge for such small nations.

Although royalties are relatively low, at 7.5 per cent (in nearby Guatemala royalties are earned at 20 per cent), the final government cut is substantially higher, closer to 40 per cent, when all other benefits are considered.

Added to that is BNE's approach to oil development, which stems from a strong belief "that the natural resources of a country must link to its people".

McCaffrey and her partners have set aside a further 1 per cent of total earnings to a social fund that will assist developmental challenges, a novel move that has been written into national petroleum legislation and copied into the legislation of other developing nations.

In the words of minister of natural resources Johnny Briceno, "they couldn't have been better partners for Belize".

"The big oil companies come in search of giant oil fields. And they would spend millions of dollars very quickly and the minute they don't see any signs of a huge find, they leave. BNE came with a different perspective . . . with a feeling of commitment not only to the country but even to the people."

Outside government circles, the feeling is not so upbeat, with many Belizeans mindful of the debates that are being waged in South America, where Bolivia and Venezuela have nationalised their energy reserves - and indeed to the east, where they're watching Fidel Castro court international companies to see who will offer his socialist island the best deal as he explores Cuban waters for reserves.

So it's hardly surprising that there's a strong lobby that believes their government has sold them short.

But, as Briceno insists, the country must first learn to crawl. "It's in its infancy here and we do not have the expertise, the markets, or the financing [ exploration] requires. And right now, we can't afford to send the wrong signals to the international community."

Or to kill the goose that laid the golden egg.