Gas/Petroleum Exploitation Close But ‘Not Necessarily a Blessing’

Nicaragua Network Hotline, 3 February 2003

Four US companies made bids for petroleum exploration and drilling rights on both coasts of Nicaragua. Offers from Hellen Gatehouse (HG), MJK Explorations Inc., Oklahoma/Nicaragua Industries (ONI), and Infinity Inc. (II) were accepted, to be evaluated over a two-month period to assess their ability to fulfill the legal requirements necessary to begin drilling. ONI proposes to concentrate its efforts on land-exploration close to the southern Pacific town of Rivas, while HG will focus on a Pacific sea-bed about 30 miles off the northwestern department of Chinandega and on an Atlantic sea-bed the same distance out from the Pearl Cays. II and MJK plan to share ocean-floor lots even further beyond the Cays at the Tyra Bank, while II will also investigate the Pearl Bank (location unspecified.) The bids were made based on previous exploratory work undertaken by the companies themselves and on information supplied by the Nicaraguan Energy Institute (NEI). The presence of significant deposits of hydrocarbons on both sides of Nicaragua has long been thought probable, but only in recent years have global demand and exploration/exploitation techniques made them potentially worth commercial extraction. According to the NEI, the total area available for exploration is 151 square kilometers. This includes both coasts.

However, as, yet again, the gleam of the unlimited promise of black gold began to shine, warning notes began to make themselves heard. Noted economist Roger Cerna observed that rarely are the benefits produced by oil exploitation shared equably among the whole population. Others claimed most of the profits are skimmed off by transnational companies based elsewhere with little or no commitment to the well-being of their source countries. They noted that Venezuela is the world's fifth-largest oil exporter yet has 80% of its people living in impoverishment. A recent Japanese survey claimed that Nicaragua's deposits could produce an annual income to the country (through taxation on oil/gas extraction) of approximately $300 million, about 50% of the country's total exports at present. However, Cerna cautioned that the Nicaraguan government would have to proceed very carefully to make sure it got the best possible deal for its people. Look at Ecuador, and Guatemala, and Venezuela. Oil income rarely translates into well-being for the majority.