Repsol Gets Go-ahead to Drill for Oil off Canary Islands
Spanish oil major Repsol could begin drilling for oil off the Canary Islands within months after the removal of the last legal hurdle to a $7 billion oil exploration project.
In 2012, Spain's government granted permits for exploration off the coasts of the islands of Fuerteventura and Lanzarote, but the permits were frozen while courts heard a number of appeals on environmental grounds.
Thousands of people marched in different cities and towns on the islands earlier this month to protest against the plans, which have been opposed by political parties, unions, environmental groups and other organizations.
A spokeswoman for the Supreme Court said the seven appeals had been rejected.
Spain produces almost no oil or natural gas and imports all of its hydrocarbon needs.
Environmental groups including Greenpeace, Oceana and the World Wildlife Fund decried the ruling, saying a spill in the area would harm protected species, coral reefs, tourism and fisheries.
"The game is not over here. The decision of the Supreme Court affects the exploration drilling where they will detect whether there is commercially viable oil. Now we're going to mobilize at a European level against this," said Mario Rodriguez, director of Greenpeace Spain.
Of the seven appeals rejected by the Supreme Court, one was from the local Canary Island government, which initially supported the project but then turned against it.
Activists argue that the exploration could hit tourism, the islands' main source of income. Greenpeace's Rodriguez said the potential damages were great compared with returns that would meet Spain's hydrocarbons needs only for two or three years.
Repsol, which leads a consortium including Australia's Woodside Petroleum and Germany's RWE Dea, has said exploration could start in the third quarter of this year, and commercial extraction could begin in 2019 if findings are positive.
The Spanish oil group said it would release a new strategic plan towards the end of this year, detailing its expected investments. Its initial plans call for spending $350 million on the first two explorations and $7 billion during the first five years to 2019 afterwards.
The production phase, expected to last 20 years, would require about $5.2 billion to extract crude oil.
Repsol estimates that the Canary Islands project Sandia (Melon), which has a probability of geological success of 12-20%, could deliver 330 million barrels of recoverable resources, and project Zanahoria, which has a 14% possibility of success, could deliver 107 million barrels.
