blue hole
Belize has been contemplating full scale offshore oil and gas exploration in its Caribbean seas for several years but has seen resistance from environmentalists and nationals concerned that widespread exploration could destroy the country’s natural wonders, which many rely on for employment.

In 2012, in a people’s referendum organised by environmental group Oceana, almost 96% of 30,000 participants voted against offshore exploration and drilling.

A year later, in 2013, due to fears over safety standards and weak environmental provisions, the Belize Supreme Court ruled that all licences and contracts related to offshore drilling in Belizean waters should be suspended.

However, this year the Belizean government announced it is now considering new regulations that would effectively allow offshore drilling in around 99% of its territorial waters.

The new draft legislation would allow companies to undertake offshore exploration for oil and gas near the Great Blue Hole, a 124m sinkhole that was named a UNESCO world heritage site in 1996 and is thought to be one of the best diving destinations in the world, as well as around the rest of Belize’s barrier reef system, which is the second largest in the world.

Both provide thousands of jobs via tourism, which accounts for around half of the overall Belizean economy.

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Economic viability

The potential for Belize’s offshore oil industry is uncertain and history doesn’t favour big finds. Currently, the Never Delay and Spanish Lookout Oilfields discovered by Belize Natural Energy (BNE) are the only significant oil finds in Belize and both are onshore.

According to the Belize Ministry of Energy, Science and Technology and Public Utilities Petroleum exploration in Belize began in the 1930s when oil exploration licenses were granted to large oil companies such as Shell, Esso, Texaco, Gulf Oil, Anschutz and Chevron in both the onshore and offshore areas of Belize.

Despite two dimensional seismic surveys being conducted, most of which were done offshore, up until 2000 a total of 50 exploration wells were drilled, 34 onshore and 16 offshore. It has also been reported that Chinese Petroleum Corporation (OPIC) had visited Belize in 2009 to collect data but has since officially abandoned all its licences in Belize.

Currently Belize Natural Energy (BNE) is the biggest oil player in the country, but Princess Petroleum Limited has a contract to explore one million plus acres of Belize, mostly offshore, for oil.

In a 2011 report, commissioned by the Belize Coalition to Save Our Natural Heritage, Richard Fineberg highlights that a high oil price is needed to make production of Belizean oil economically viable due to typically low production rates.

Western sanctions, a lower oil price and a lack of technological capabilities are stalling development.

For example, he says BNE’s significant profit margin during its first full production, as indicated by the reported income tax payment on Spanish Lookout production in 2006, despite reporting low production rates, reflects the "remarkable increase in oil prices since 1998…that has radically altered traditional petroleum economics by increasing the potential viability of exploration projects that probably would not have gone forward under the oil prices that prevailed during the last quarter of the 20th century."

At the time of writing the average oil price is around $50 a barrel – perhaps high enough to still make exploration and production viable but still significantly down from the lofty heights of 2014’s average oil price of $85 and nearly $100 the year before.

The report also points out that Belize’s proved oil reserves are insignificant to other countries such as Saudi Arabia which has proved oil reserves ten thousand times greater than Belize’s discovered reserves, plus total Belize oil production to date [2011] from its two discovered fields.

Rick Steiner of Oasis Earth, who wrote a report on the environmental impacts of offshore exploration in tandem with Fineberg’s and also commissioned by Belize Coalition to Save Our Natural Heritage, says for the Belizean people, developing an economy based on a finite, unsustainable resource such as oil only creates an unsustainable economy.

"Further on economics of offshore drilling, the resources in Belize are likely so small as to not attract the big players in the offshore industry," he adds.

"Thus, if they did move forward with this, it would almost certainly be small companies, some with questionable experience and capability. This only adds to the risks."

Potential environmental impact

The Belizean’s government’s latest proposals are outlined in the Petroleum Exploration Zones and Exploration Guidelines document prepared by the Geology and Petroleum Department.

According to Belizean newspaper Amandala, which claims to have seen the document, it effectively states that although the whole of Belize can be earmarked for oil and gas exploration the plan "sets out to break up the territory of Belize into four zones: zone 1, where no petroleum exploration is to be allowed, and zones 2 to 4, where petroleum exploration would be allowed with varying degrees of restrictions and guidelines, ranked based on priority level."

The newspaper reports that most of the areas listed as zone 1, where exploration would be banned, are known as the Maya Mountain Massif, home to 14 protected areas, as well as the area of north Ambergris Caye, where part of the Belize Barrier Reef can be found.

Steiner’s report outlines some of the impacts opening up offshore Belize might have on the environment.

Some of the key concerns highlighted in his report are the effect of seismic shoots impacting ecology and behaviour of marine mammals, invertebrates and fish, waste and noise produced and, if oil is discovered, the "low probably but high consequence" of an oil spill that will be difficult to contain in aquatic environments. It also highlights some gaps in legislation to protect and preserve some national protected areas in the National Protected Areas Policy.

"A high oil price is needed to make production of Belizean oil economically viable."

The report estimates that in Belize alone the reef was estimated to contribute approximately $395 – $559m in goods and services each year. In 2009 the reef was inscribed by UNESCO on its list of "World Heritage in Danger," due in part to the threat of offshore oil drilling

"Belize’s offshore reef ecosystem is one of the most sensitive marine environments in the world," Steiner says.

"Even if nothing were to go wrong, offshore oil exploration would cause extensive habitat disturbance from noise, sediment suspension, and toxic discharges to the marine environment. It would also compromise the scenic beauty of the offshore region, which thousands of tourists from around the world pay good money to see.

"Why should the government of Belize pose such a risk to its lucrative offshore reef ecosystem?"

Steiner’s report goes on to recommend that the government and people of Belize opt to exclude all current Protected Areas and marine environments from oil development as the two are clearly "incompatible". It also raises concerns about government and industry standards applied to the oil industry in Belize being insufficient to protect the environment and public interest, highlighting that the government of Belize is very new to the issue of regulation and oversight of oil development.

In all, Steiner provides 30 different recommendations to government in order to strengthen regulations and provide better environmental provisions. Steiner says as far as he knows the government has not implemented any of them.

Janelle Chanona, Oceana’s vice president for Belize, which runs a campaign against offshore oil and gas exploration offshore Belize, told local media: "The Belize Barrier Reef System provides hundreds of millions of dollars in direct and guaranteed economic benefits via tourism, fishing and storm surge protection.

"Those hundreds of millions of dollars can not be dismissed in favour of the mere ‘potential’ of anything else – especially something as dirty as offshore oil."

Chanona went on to say that one in every four Belizeans depends directly on tourism and there are approximately 3,000 licensed fishermen accessing Belizean waters.

High local opposition and uncertainty, limited potential and a lower oil price make the environment for oil and gas exploration offshore Belize unfavourable. Will the government be able to push exploration through with favourable terms for oil companies despite local opposition?

"There are two opposing camps in Belize – there is a robust, nationwide citizen effort to protect the offshore reef ecosystem from threats such as offshore oil drilling, and there is a contingent in government and industry that sees dollar signs from drilling.

"My bet is on the citizens opposing offshore drilling," says Steiner.