The Petroleum Corporation of Jamaica (PCJ) has received three applications for licences for oil and gas exploration as at the June 15 deadline for the submission of bids.
Group Managing Director at PCJ, Dr. Raymond Wright, said the applications were for 10 blocks, but noted that there was some overlapping in some of the blocks applied for. A block has a minimum measurement of 2,500 square kilometers.
Dr. Wight told JIS News that the applicants would be informed in another three months or so, whether they were successful in obtaining the licences for onshore and off-shore exploration, after which, the contractor would undertake further seismic and geo-physical work to determine the best sites for drilling. He indicated that drilling could commence within another three to five years.
PRODUCTION SHARING ARRANGEMENT
Dr. Wright, while delivering a pubic lecture at the University of the West Indies' (UWI), Mona campus, recently, had said that a production sharing arrangement would be in place between the PCJ and the successful oil companies, which means that, profits from the field will be split between the contractor and the PCJ.
Additionally, he pointed out that companies would have to bear the exploration expenditure and be reimbursed through a cost recovery process. The arrangement would also see royalties being paid to the government for the oil and gas produced.
He explained that the royalty would be on a "sliding scale in respect of offshore drilling, decreasing as you go into deeper waters". The highest amount payable for royalty would be 12per cent and thereafter decreasing at greater depths, he pointed out.
The PCJ head further noted that a negotiable sum would be invested during each year of the exploration licence for training Jamaican personnel in matters related to the energy industry. He expressed the hope, that the main beneficiaries of this training would be university students doing advanced studies.
An important innovation in the contracts, Dr. Wright went on to point out, would be a requirement that 2.5 per cent of profit be placed in a petroleum fund for use in social and environmental projects.
This measure, he said, was to ensure that the surrounding communities benefited during the production period.
"The fact that oil is found in an area and the people living in that area do not get much benefit has been a cause of great concern," Dr. Wright said. Citing Nigeria as an example, he pointed out that a failure to allow benefits to spill over to the surrounding communities in the Delta region had led to many problems and discontent among its residents.
"Whether it be the fishermen on the Pedro Banks or the people living in onshore drilling areas in Westmoreland, they will be involved with social and environmental programmes emanating from the (drilling) project itself", he declared.
Dr. Wright pointed out that the implementation of a Gas Policy would ensure that any gas produced would first go towards satisfying domestic power generation needs, while the excess gas would be exported. He added that Jamaica would not be asking for a special price and local gas pricing would be linked to the international market price to protect investors.
