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Region: liquid gold

Monday, August 19, 2013

Nicaragua is the latest Central American countries planning to explore the Caribbean coast for viable oil-gas deposits of oil.

Managua last week awarded a contract to United States-based Noble Energy, to drill near Providence Reef, 170 kilometers offshore.

Nicaragua has allocated various blocks for exploration, said President Daniel Ortega, announcing the new project, which would be an alternative to the importation of Venezuelan oil, the price of which is will likely rise at some point.

Venezuela, which faces domestic economic challenges, is unlikely to continue indefinitely with a plan, launched a decade ago by then-president Hugo Chavez, of providing low-cost petroleum to countries, which belong to the Caracas-based Bolivarian Alliance.

Last month, Guatemala awarded oil exploration and exploitation licenses to France's Perenco, Panama's Gaiax Garden, Colombia's Trayectoria Oil and Gas, and Russia's Zacapa Energy, as well as Island Oil Exploration and Greenfields Petroleum Guatemala – both based in the United States.

Each license is for a specific region.

Citation Resources last June, that it was ready to start commercial production from its Atzam-4 well.

Meanwhile, Panama in 2011 said that it plans to invite bids for exploration in at least three regions, including Bocas del Toro, Darién, and Azuero, following a positive report on likely deposits, prepared by OTS Internacional, a Venezuelan company.

The expectation of finding valuable oil-gas deposits in the Caribbean has resulted in Nicaragua aggressively suing Colombia over territorial waters.

Last month, Nicaragua claimed an area of close to 1,000 square kilometers of continental shelf, which Colombia has considered its property.

The lawsuit follows a 2012 decision by the Hague-based International Court of Justice, declaring Nicaragua the owner of some 75,000 spare kilometers of ocean, between the San Andrés island group and the Central American coast.

Costa Rica ten years ago imposed a moratorium on oil-gas exploration.

However, the rules may change, following the election next February of a new government, given the twin national problems of spiraling energy costs, and a chronic deficit in financing public-sector operations.

Environmentalists in all countries continue to oppose these projects, especially Providence, once of the biggest barriers reefs in the Americas.

To the extent that new deposits produce natural gas, the region could fight pollution, by cutting down on petroleum consumption, in both the transportation and energy-production sectors.

There is a reasonable likelihood of oil-gas along the Caribbean coast of Central America, between long-proven major deposits in Venezuela and Mexico, according to various studies done in recent years.