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Marty Offline OP
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March 25, 2006
It's Official: Oil In Commercial Quantities in Belize

Belmopan,Belize 24 March (Belizean.com) The Government of Belize has announced that it has received confirmation from Belize Natural Enegry Ltd. that Belize has oil in commercial quantities. Spaking in the House of Representatives today, Natural Resources Minister Hon. Johnny Briceno, stated "I take this opportunity to inform the Belizean people and this House that on March 6th of 2006, Belize Natural Energy Ltd. wrote my Ministry and declared, and I quote, 'BNE indicates that the oil discovery in Spanish Lookout is of commercial quantity."

In a television interview, Belize Natural Energy spokesperson Sheila McCaffrey, said:

"Yes indeed we are confident that we do have a commercial discovery in Belize of the oil find we have made in Spanish Lookout. We have operationally drilling on the ground since the early days of June 2005, and we have drilled three wells and completed those and have those three wells in production at the moment. A fourth well is underway and will be completed within the next week. Roughly the three wells are producing about 2,000 barrels of high quality, between 39 and 41 degree APIs, light sweet crude oil for the last 90 days so that's really good news for everyone and its really good now to be able to make the announcement that this looks there is a commercial discovery.

"This is an important discovery, there is no doubt about that, for the country. First of all we have the capacity of making the country self-sufficient on energy but I think we must keep it in context in terms of a global oil find, its still relatively a small amount of oil. We believe there are crude reserves at this moment in time of 44 million barrels of oil of which we hope to recover 35% of that which would be normal oil field practice and based on that, that is significant to the country. But do I think it's going to significantly change everything about the world oil prices, no its not. This is a drop in the ocean of the amount of oil that is required and this complete discovery will be used in a matter of minutes because the world is reliant on billions of barrels of oil every single day."

For his part, Hon. John Briceno spoke out on the development of the oil industry in Belize:

"Belizeans rightly ask how will this industry be developed, will it be owned and controlled by a few, will the benefits be enjoyed by only multi-national companies, what will happen to the revenue that comes to government, how much revenue will be earned. These and many other questions are all legitimate and require full and frank responses. This government believes that any response on the development of the petroleum, industry must has as its starting premise, the following principles and I quote: 'the entire property in and control of all petroleum and accompanying substances in whatever physical state located on the territory of Belize in which rights of exploration and exploitation are exercisable by Belize are vested exclusively in the government and people of Belize.' This provision of the Petroleum Act vests all oil in Belize exclusively in the government of Belize for and on behalf of the people. Oil is natural patrimony, oil in Belize belongs to the people of Belize. That Madam Speaker is a fundamental premise upon which we must develop the oil industry in Belize. The creed of the PUP also states that it is the sacred duty of the government to intervene actively in the economic life of the nation where necessary in order to secure a better life for all Belizeans.

"The laws of Belize and the philosophy of the PUP makes it abundantly clear that our sacred duty is to ensure that as we develop the natural resources of this country that it is done in a manner that secures maximum benefit of the people of Belize."

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Found this info on another site, puts a more re4alistic spin on the subject than the GOB

There is an estimated reserve of about 44 million barrels of which 35% are recoverable. This equates to a little over 3 hours of world oil consumption (119 million barrels per day). Is this really considered commercial quantity?

If the 16 million barrels are recovered over the next 10 years, and the average price per barrel is $100 and the GOB actually gets 37% as advertised, that amounts to just under $6 million per year. This is nothing to scoff at, but not the salvation of the country. Not when the interest on the national debt is $250,000,000 +.

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Marty Offline OP
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Petroleum Advisory Board holds 1st Meeting

Belmopan - 21 March, 2006.
The recently appointed Petroleum Advisory Board held its first meeting last week at the Belize Central Bank Board Room.

Board members elected were Mr. Eamon Courtenay, Chairman of the Board and Mr. Lennox Neal, Chief Operations Manager of Belize Sugar Industry Limited, Deputy Chairman.

The other members of the Board include:

Mr. Ismael Fabro, CEO in the Ministry of Natural Resources; Mr. Andre Cho, Director of the Geology and Petroleum Department; Mr. Martin Alegria, Acting Chief Environmental Officer; Mr. Cresencio Sosa, CEO in the Ministry of Public Utilities; Dr. Carla Barnett, Financial Secretary in the Ministry of Finance; Mr. Hugh O'Brian, CEO in the Ministry of National Development; Mr. Andrew Marshalleck, Attorney-at-Law; Mr. George Sosa, Businessman; Mr. Pedro Perez, Banker, representing the Belize Business Bureau and Mr. Israel Marin, Businessman, representing the Belize Chamber of Commerce. Dr. Ramanathan Ramanathan serves as an Advisor to the Board.

Hon. John Brice�o, Deputy Prime Minister & Minister of Natural Resources, Environment and Local Government, attended the meeting and participated in the deliberations.

Minister Brice�o urged the Board to "spare no effort to study available material and make recommendations to Government to ensure that Belizeans benefit justly from this new industry. Let us avoid the so-called 'resource curse' and establish a sound strategy and prudent framework to develop the industry and protect the revenue that will become available to Belizeans."

The Board reviewed the Terms of Reference for the Board and approved a short-term work-plan, which includes:

1. The recommendation of an exploration strategy for vacant blocks to maximize revenues for the Government;

2. The recommendation of a negotiating team for the Geology and Petroleum Department to strengthen the Department's negotiating capability for exploration contracts;

3. The evaluation of Government's option to purchase a 10% working interest in the petroleum companies and recommendations for exercising that option to increase Government's take of revenues;

4. The evaluation of proposals to amend the Petroleum Laws and contract model used in Belize to improve the legal and fiscal regimes for greater long term benefits for the Government; and

5. The Evaluation of various models for petroleum revenue management from other countries and recommendations for a strategy for Belize to maximize benefits to Belizeans.

The Board reviewed a proposed exploration strategy and will provide the Ministry of Natural Resources with its recommendations on the Strategy at the next meeting.

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That's the problem with something like this. The Government of Belize will think it's some massive cash cow that can bail the country out of its debt. They'll make the mistake of failing to implement imaginative and growth-positive fiscal policies because they think a few million bucks worth of black gold will do the trick.

Helloooooo Belmopan: Lower the Real Estate Transfer Tax, drop the GST idea, make EVERY business and self-employed person register for the present Sales Tax and quit pandering to businessmen who want laws implemented designed to crush their competition.

Joined: Sep 2005
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I agree in principle that this oil find may not be a magic wand that will solve all the problems in Belize overnight on its own. But what it could do, if handled properly, is start the ball rolling. There will be knock on effects, and each of those will create opportunities, which must be grasped and made to work for the good of the county and the benifit of the people.

I lived in Belize thirteen years ago, and I'm sure things have changed a great deal, and I really must find the time to go back and visit; but I remember what it was like then. The fact that so many people don't have opportunities; we won't hear from any of them on this website. I'm amazed at how sceptical and synical (negative really) most comments regarding the oil find have been; not just on this site. I understand the reasons, to some extent, when you look back at a history that has included some corruption and some poor decisions in the past, but I would like to see Belize and its people look to the future. Take the opportunities that come your way.

Without change, nothing changes!
I'm now living in Belfast.

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Marty Offline OP
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Belmopan seeks bigger share of oil revenues
It may just be coincidence but following last week's unprecedented budget briefing by the Financial Secretary and today's petroleum presentation by the Ministry of Natural Resources, one gets the impression that a dangerous outbreak of transparency may have infected Belmopan. This morning for example, not only did the technicians at the Geology and Petroleum Department offer a thorough explanation of the oil situation in Belize, but both the Minister and Chairman of the Petroleum Advisory Board responded forthrightly to a wide range of sometimes penetrating questions.

So what did we learn? That Belize's six million barrels of proven reserves are a drop in the ocean. Even Mexico's huge oil reserves represent only one percent of the world total. But the geology of certain areas of Belize is similar to oil bearing parts of Mexico and Guatemala and this similarity holds great promise for future discoveries.

Perhaps more importantly we were informed that when it comes to government's revenues from oil there is more to consider than just the seven point five percent royalties; that after all taxes, fees, and production sharing are tallied the take comes to much more. How much more is a matter of debate. Belize Natural Energy says the figure is around thirty-eight percent and while Minister of Natural Resources, Johnny Briceno, would not confirm this number, he made it clear that his government believes a figure of around fifty percent would be acceptable. The best method to claim this additional revenue seems to be the setting of a new rate of income or business tax on the industry. When asked by News Five's Stewart Krohn if this special tax hike amounted to an act of bad faith, Petroleum Advisory Board Chairman Eamon Courtney made it clear that the government of Belize would some way or another have to get its fair share.

Eamon Courtenay, Chairman, Petroleum Advisory Board
"What we have today is the position that government believes that it is fair and just for the share to be around fifty-fifty. The tax situation in Belize today may not yield a fifty-fifty ratio. However, the point you make is fully respective. The production sharing agreement provides, Dr. Ram emphasised it, it provides that the income tax payable is the law as amended from time to time. So, no company can say to the government of Belize at any time that we invested in 1950 and the income tax was this in 1950 and you can't change it, because that is what I expected. If you read your production sharing agreement, it says as amended from time to time. The matter is under study, no decision has yet been made. However, the philosophical basis is that there should be equity and fairness between the investor and the country. That's the point, so it is not being unfair to any particular investor, nor has government taken any decision in that regard yet. But fairness must be had."

Just how hard government intends to squeeze the oil industry is not clear. Responding to a question about rumoured friction between government and Belize Natural Energy, Minister Briceno said any differences were minor and just a matter of meeting some deadlines.

Johnny Briceno, Minister of Natural Resources
"As to our working with B.N.E., we have maintained good working relations with them from the time they started way back in 2002. But what happened is that last week there were two outstanding issues that we had to address. The first one was that moving from the production testing to actually production of oil, and secondly was the issue of the ten percent buy-in that we had asked for the P.S.A. We had a deadline that we should have finished those discussions and we had it as of Wednesday. Because we did not finish on Thursday, it was just-I was just advised that it was just in our interest to put it on record, which is what we did. We did send a letter to B.N.E. on Thursday that we need to settle on these outstanding issues and they need to stop the actual production. I met with them, along with Dr. Ram and our director Mr. Andre Cho, on Friday evening after the House meeting. And we basically settled the two outstanding matters, so we allowed them to continue to produce. What we have done then yesterday and then this morning, we actually finished the agreement and I have in writing now where what has happened is that they have agreed to the conditions that we've asked. They have given us our first cheque on royalty, just for royalty up to March third for a hundred and sixty-five thousand U.S. dollars and then we have the other, the one and a half percent production that we have-the tax that is going to be charged, all of that has to be worked out. But what they have done right now is pay the seven and a half percent royalty."

Today B.N.E.'s Sheila McCaffrey confirmed that some contractual clarifications were made but that its relationship with Belmopan was cordial and amounted to business as usual. She confirmed that the company welcomed government's decision to buy a ten percent interest in the Spanish Lookout field, a purchase that B.N.E. will finance interest free. As for the issue of taxation, oil experts tell News Five that while government is well within its rights to raise taxes on the oil companies, the long term development of a petroleum industry--including the costly infrastructure of tank farms, ports, and delivery systems--will require an environment condusive to large scale investment and above all a climate of fiscal stability.

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Marty Offline OP
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The oil is commercial, Jack!
by Adele Ramos-Daly

BELIZE CITY, Thu, Mar. 23, 2006

Minister of Natural Resources, Hon. Johnny Brice�o, and Sheila McCaffrey, Director of Belize Natural Energy (BNE), both declared Belize's first ever find of crude oil to be deposits in commercial quantities.

Since the early 1900's, according to the records, fifty wells had been drilled in Belize before BNE began exploring the Spanish Lookout area of Cayo nine months ago. Plans are also being drawn up for exploration in the capital city, Belmopan, and in Cayo, where oil is also known to exist.

Delivering a special statement in the House of Representatives today, Brice�o said that the proven reserves in the Spanish Lookout area are about 6.7 million barrels. At current prices, that translates to almost US$400 million in oil earnings and US$30 million for GOB in oil royalties alone.

McCaffrey told us this evening that BNE data indicate that the possible reserves stand at 44 million barrels.

Mr. Brice�o said that he would recommend to Government that it purchases a 10% share in BNE; however, no price for the shareholding was quoted. When we asked McCaffrey how much it would cost, she said that it depends on the findings of a Government audit.

Ms. McCaffrey further said that under the production sharing agreement between GOB and BNE, 10% of BNE is available for GOB. According to her, BNE is obliged to fund 50% of GOB's purchase.

She also informed that BNE had gone three times to the Central Bank to get permission to offer shares to Belizeans, but that was before the drilling phase, and they were told that it was "too risky." When we asked whether BNE would approach the Central Bank again, McCaffrey said that she doesn't know.

Minister Brice�o announced today that total oil production in Spanish Lookout was 101,000 barrels and average production at the existing wells is 2,150 barrels a day. There have been three shipments totaling about 100,000 barrels to date, McCaffrey told Amandala.

According to Brice�o, BNE had written GOB declaring a commercial find since March 6; however, no disclosure was made until today's drawn-out House debate. The obviously strategically timed announcement was undoubtedly the highlight of today's proceedings.

McCaffrey told us that 3 wells are in production in Spanish Lookout, Cayo, and a 4thwell should be completed in the next 5 days. It should be ready for testing in the next two weeks and production by next month. A fifth well is also planned.

In addition to explorations in Spanish Lookout, she said, BNE also plans to explore the Belmopan area, where oil wells drilled in the 1930s found oil, but at the time it was said not to be in commercial quantities. She said that they are currently drawing up a program for the Belmopan area.

McCaffrey said that the oil fetches about $5 less per barrel than the West Texas Intermediate Crude. She quoted US$57 a barrel. For a hundred thousand barrels, that translates to US$5.7 million. Royalties to GOB is 7.5%, or about US$430,000.

She further stated that with taxes and other oil revenues, GOB's earnings per barrel could be as high as 37% to 38%.

When we asked how much GOB has collected to date, she said that she was unable to give the specific numbers. As far as we are aware, Brice�o did not report them today.

As to what's next for BNE, McCaffrey said that they are also working on setting up a tank farm at the Big Creek Port and another at Spanish Lookout, which, she said, would be under the ownership of BNE.

She also said that discussions continue on the importation of a topping up plant or mini-refinery to make diesel from what has been termed "sweet light Belize crude."

While details are sparse at the moment, she also announced that BNE plans to make an announcement next week on the first shipment of medical supplies, which would be the initial purchase from the 1% fund for health education and environment, which also forms part of its agreement with GOB.

Company Director, Jen Cornec, had told us in June of 2005 that in the 1930's, six of seven wells drilled in the Belmopan area were found to have oil, but they were deemed uneconomic to explore.

BNE had said then that Spanish Lookout explorations were promising, since they were drilling on an anticline, a convex fold in the rock, with the central part consisting of the oldest rock.

McCaffrey had said that production of 15,000 to 20,000 barrels a day would meet Belize's needs, but there is no pronouncement to date as to whether local production could realistically meet them.

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Marty Offline OP
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GOB Orders Oil Explorers to Halt Production!
posted (March 27, 2006)

On Thursday of last week, Minister of Natural Resources John Briceno reported to the National Assembly that oil has been discovered in commercial quantities in Spanish Lookout. It's a tremendous and historic development, but that doesn't mean it's all smooth sailing ahead. As a matter of fact, relations between the government and the oil company that made the discovery, Belize Natural Energy, have hit the rocks. 7NEWS has been reliably informed that by the end of business on Thursday, just hours after Briceno's announcement, the Ministry of Natural Resources sent Belize Natural Energy a letter ordering that it halt operations immediately.

As we understand it, the dispute centers over government's decision to exercise its option and purchase 10% equity in Belize Natural Energy. However, there's been some difference over who will finance that. It seems that, initially, BNE had committed to the financing but then changed its position. Meetings are being held to reach a compromise but presently government's stop order has not been revoked. Meetings to resolve the impasse continue into tomorrow.

Government is eager to exert some muscle because on the present block that BNE is drilling, the commercial projection is that the company can harness 19.2 million barrels of oil, worth more than US$1 billion at US$50 a barrel, below current world market prices.

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Oil and optimism flowing freely at Spanish Lookout
While the company's owners gathered in Belmopan to make their contribution to the nation's medical facilities, the wells, pumps, bowsers, and employees of Belize Natural Energy Limited continued in their efforts to radically improve the nation's economic health. This afternoon I took a brief tour of the Spanish Lookout oil field and discovered that in addition to petroleum, a sense of optimism has been discovered in more than commercial quantities.

(Clanging noise)

Janelle Chanona, Reporting
For oil exploration experts, that sound is music to the ears.

Robert Craig, Drill Manager
"At the moment we have a couple of tanks that we-any fluids, gas, or anything that we produce from the well are coming into those tanks. The pump is just to clear those tanks, so usually it is a good sound because it means that something returned from the well. Quite often it's water, but in most of the cases here, we've been lucky that there's been some oil come through."

After direct hits at Mike Usher 1, 2, and 3 Belize Natural Energy officials hope well number four will also strike gold.

Since the company officially announced "commercial quantities" of oil in Spanish Lookout, the pace of activity has quickened. A 3D seismic test is now in the pipelines to determine the boundary of oil field and other potential pools in the B.N.E. license block. That area of approximately four hundred thirty-eight thousand acres of land, spans parts of Benque, Yalbac, Spanish Lookout, Belmopan, and even Burrell Boom.

Sheila McCaffery, Director, Belize Natural Energy
"It's making history here in Belize; it's making history all over the world, because this is the first time this country has had a commercial discovery. And to move from an exploration programme into an commercial discovery is of course a huge step forward in terms of it has huge implications, not only for social and economic, but also from a business perspective and it's huge potential for everybody. It is vindication of what we've felt, I suppose, from the very day that we all set foot in Belize to start this project over four years ago, and of course particularly since we started drilling in June 2005."

Janelle Chanona
"According to B.N.E., this is the only thing that will remain here at Mike Usher number 1 once the tank farm is established. And if you listen carefully, you can actually hear the oil coming out of the ground. This is all done naturally just because of the pressure that's coming up with the gas. And if you touch this pipe, you can actually feel the temperature of the oil that's being transferred to the holding tanks."

Sheila McCaffery
"We are all about reducing the impact of what's on the surface. And as you can see, it's a very, very different site today than the Mike Usher one site than when it was when you were here in June/July of last year when there was lots and lots of machinery here. The impact of the oil industry ultimately will be that small black Christmas tree-as it is called-at the top of the well and that is what allows oil to be produced currently. And if at some stage in the future we have to have mechanical intervention that can pump or whatever, it will be it will no greater than the size of the fencing outside the pipe. So in the longer term, all of this will be restored back to agricultural land."

Presently, fifteen tanker trucks transport more than two thousand barrels of Belizean crude from all three wells every day to a waiting barge in Big Creek. B.N.E. plans to construct two tank farms, one in the Spanish Lookout area and another near the port. Those facilities will include three tanks, each capable of holding ten thousand barrels of oil. The size of the tanks is roughly the same as the Esso storage at Port Loyola.

But the B.N.E. oil discovery in Spanish Lookout has also opened a can of criticisms regarding ownership of the natural resource and exploration opportunities.

Sheila McCaffery
"There are other license blocks available, I do not see a rush of Belizeans or anybody else necessarily coming forward to grab those blocks and invest millions and millions of dollars to be able to do that. I hear lots of talk about it, I haven't actually physically seen anything on the ground just happening yet. And I know myself just how difficult it is for an oil company to come down here and mobilise equipment to get in here when the oil market is all over the world is buoyant and every piece of equipment is being used and is at a total premium."

"Various statements are made that there is oil in the north, there's oil in the south, is there? I don't know that there is. I certainly don't know if that is, but I certainly think fifty companies failed spectacularly to find it. The only thing that is real is that there is definitely oil in Spanish Lookout and we are producing it. And the oil industry is Belize Natural Energy in Belize at the moment. Of course like every other company, we would love to see other companies in here because it would bring the whole industry into a much more rounded perspective and we then could see sharing of cost and the overall cost of wells and stuff like that go down. So therefore the cost of exploration and the extension of the industry to drive the country would improve, so it's in our interest to have other people here as well."

But following last week's historic announcement, it appears B.N.E. has begun to buck heads with government negotiators regarding benefits to Belmopan.

Sheila McCaffery
"Subject to a joint operating agreement, which we will agree over the next ninety to one hundred and twenty days, the government will sign up and become an active partner and gain the industry knowledge, which it requires to run an oil company and to run an oil field. And that will require investment by the government as well, because let's be under no illusion, the cost of developing this oil field in Spanish Lookout will far exceed the sales of oil for the foreseeable future and there will continue to be a heavy investment for the next twelve to eighteen months. So as long as people understand that, yes, there is oil sales being produced, but the infrastructure requirements and the cost of developing an industry in the country here is actually far greater than what the sales of oil is likely to be in the foreseeable future, certainly for the next twelve months."

"It's kind of interesting that the Petroleum Advisory Board is advising about the oil industry and we're not a partner, given that we are the industry in Belize at the moment. But, I have no-I don't know what really the government were really referring to. What I do know as being factually true is that Belize Natural Energy under current its production sharing arrangement, currently contribute thirty-eight percent of that they sell to the government and it happens in the following way: seven and a half percent royalty is on the gross amount of money that comes in, that's the money before all of the operating and exploration costs are apportioned. So therefore, if you are comparing a royalty payment versus a net profit that would be taxable, there is a rule of thumb which would be a factor of three, so you have seven and a half multiplied by three is equal to twenty-two and a half tax, plus your ten percent that the government owns that they are currently under the joint operating agreement, plus the fact that we are giving that interest free to them, plus the fact there's a production share. So that's how you arrive at thirty-eight percent."

According to B.N.E. director Shiela McCafferey, there are currently six teams working simultaneously to ensure efficient flow of oil from well to barge. Claudio Tzul is one of the one hundred Belizeans employed by B.N.E.

Claudio Tzul, Pumper, Belize Natural Energy
"We work hard out yah and I think pan the ending of the day, I feel very proud of it because then we achieve a lot, we learn a lot. From the time I start to work here, I learn a lot of different thing."

"It's a proud time to be working with B.N.E. because it's the first time that something like this happen naturally in Belize and I think, I hope it lasts us forever for a long time so my kids get for see it, their kids get for see it; it will benefit the whole Belizean population after all."

Planning for wells five and six are currently underway.

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...its a geezer!!! eek


Gone fishing!!
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