Spain's Repsol gets long awaited green signal to explore off Canary Islands

Spain News.Net Wednesday 13th August, 2014

MADRID - A consortium led by Spanish oil giant Repsol SA has been granted permission by the Spain government, after years of protracted opposition from environmentalists, political groups and court challenges, to explore for oil and gas off the Canary Islands, a major tourist destination.

In a resolution published in the Official Bulletin dated August 11, the government has granted permission to Repsol and its consortium partners in the project Australia's Woodside Energy Iberia and Germany's RWE Dea AG, to carry out exploratory drilling 50-55 km off the coasts of Lanzarote and Fuerteventura for four years with an investment of 7.5 billion euros.

Repsol will now go ahead with three probes east of the island of Fuerteventura, in an area estimated to hold rich hydrocarbon reserves that could potentially meet up to 10 percent of Spain's energy needs, according to The Local.

Repsol, which expects to begin work by year-end, estimates that the project could supply more than 100,000 barrels of oil a day, or 10 per cent of Spain's energy consumption. Currently, Spain spends around 40 billion euros annually to import 99 per cent of its oil requirement.

Spain's Minister for Industry, Energy and Tourism, Jose Manuel Soria told media in Madrid on Wednesday, "We have studied all the arguments that have been presented and, as they do not affect the content of the authorisation, we have proceeded to the signing of the resolution."

Soria assured that his department had taken on board " all the allegations" made by both the Canary Islands' local government and the environment campaigners.

Those opposed to the planned explorations have filed appeals and campaigned constantly since initial approval was given in 2012 to allow prospective explorations near Fuerteventura and Lanzarote islands..

In June, Spain's supreme court paved the way for the exploration to begin when it rejected the appeals of environmentalists who fear adverse impact on eco system and jobs of locals on the islands.

Under the terms of the licence, Repsol led consortium will need to take a 40 million euros insurance policy and post 20 million euros in collateral to cover possible environmental and civil damages at the drilling zones.

It will also be required to install seismic monitoring devices and halt drilling if an earthquake above 4.5 on the Richter scale is detected within a 75km radius.

Fernando Rios, a minister with the Canaries' regional government, threatened to "go to the UN if necessary" to stop the drilling.

The islands "reject [the decision] in form and substance", he declared to local media, reported The Local.

The Canaries' regional government and hospitality industry fears that the drilling would hurt tourism its principal economic activity. In 2013, tourism revenue of the islands was about 11.7 billion euros.

Anxela Iglesias, a spokesperson for Ecologistas en Accin, said the groups were discussing legal options with their lawyers.

She added that protests would continue on the islands in coming weeks. "We are going to use all the tools at our disposal," she said.

Kristian Rix, a Repsol spokesman, said the project will create 3,000-5,000 direct and indirect jobs for the Canaries if oil is found.