Oil discovery threatens Belize's reputation as pristine haven
May 7, 2006
By Mica Rosenberg
Spanish Lookout, Belize - A Mennonite farmer watches a black plume of smoke spew from an oil well near his house in western Belize, the only visible sign that this tiny central American nation is the world's newest oil producer.
For over 50 years wildcat oil companies have been drilling in this former British colony bordering Guatemala and Mexico, but this year for the first time a joint venture between Belize Natural Energy (BNE) and Denver-based investment firm CHx Capital finally struck the black gold.
In March BNE, a small firm backed by about 80 Irish and US investors, declared the oil find commercially viable - big news for a sleepy country the size of Massachusetts.
The 6 million barrels of proven reserves in the Spanish Lookout area, inhabited mainly by a tight-knit community of Mennonite settlers, is a drop in the ocean of world oil supplies, but with crude topping $70 a barrel, expectations are high.
However, some worry that further oil exploration could ruin Belize's reputation as a pristine tourist haven, with a barrier reef declared a UN world heritage site. Over 200 000 foreigners a year visit this country of just 280 000 people.
"We have to make sure not to skew the whole economy of the country by becoming dependent on oil," Prime Minister Said Musa says in an interview in the capital Belmopan.
"In everything we do, environmental conservation and protection is a central concern. We can't sacrifice that for short-term gain."
BNE is now pumping over 2 000 barrels a day of high quality light sweet crude, similar to the prized West Texas Intermediate grade.
The oil is shipped to the US for refining, since Belize has no processing infrastructure of its own.
BNE estimates there could be more than 15 million barrels of oil in Belize, whose economy has depended almost entirely on tourism, sugar cane and some citrus, bananas and fish products.
Environmental groups, however, are concerned the find in Spanish Lookout will spur more exploration in southern Belize's Sarstoon Temash National Park, an area long suspected to have oil reserves.
Encompassing 16 600ha of relatively undisturbed wetlands, the park is home to hundreds of species of birds, tropical butterflies and animals, including manatees, ocelots and endangered jaguars. Indigenous Mayan communities want to promote it as an ecotourism destination.
Texas-based US Capital Energy is ready to begin seismic testing in the area, but advocates for the park's protection say exploration could damage a rare delicate lowland moss.
The German-speaking Mennonite community, where all of BNE's current operations are concentrated, also has environmental concerns.
Peter Dueck, whose house overlooks one of the drill sites, says everybody is worried about the smell and the pollution. "We have rain water collection systems for drinking water. What if that smoke is poisonous?" he asks, watching natural gas burn off the well near a cow pasture.
But most of the community's concerns are overwhelmed by the promise of royalties they will receive.
The Mennonites, who settled in Belize two generations ago and cut down the jungle to build a network of profitable farms and dairies, are promised 5 percent of the government's 7.5 percent take of oil profits.
Between taxes and royalties, the country will end up collecting over 30 percent of BNE's gross income.
"Belize was caught by surprise by this bonanza. They knew there was oil all along but now that it's commercial, it's a different ballgame," says Godsman Ellis, the head of the Belize Alliance of Conservation NGOs.
"The country will close its eyes to environmental degradation when the dollar is flashed." - Reuters http://www.busrep.co.za/index.php?fArticleId=3235202&fSectionId=552&fSetId=662