INTEREST IN BARBADOS OFFSHORE OIL BIDS HIGH

UNCLAS BRIDGETOWN 001224

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAR, WHA/EPSC (F. CORNEILLE) AND
EEB/ESC/IEC (M.MCMANUS)
DEPARTMENT PASS TO DEPARTMENT OF ENERGY

E.O. 12958: N/A
TAGS: ENRG EAGR ETRO EAID EPET EINV PGOV PREL BB
SUBJECT: INTEREST IN BARBADOS OFFSHORE OIL BIDS HIGH

SUMMARY
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1. (SBU) P/E Chief and Deputy met with the country managers
for Simpson Oil (SOL) and Shell Trading Company (Eastern
Caribbean) on September 13, 2007 to discuss the energy market
in the Eastern Caribbean, prospects for renewable energy and
the upcoming bid for oil block exploration, announced by the
GOB in June, 2007. Bids are due late November, and over 60
companies have expressed preliminary interest. Contracts are
expected to be awarded late December or early January 2008
for 24 exploration blocks. End Summary

Bidding for 24 Off Shore Oil Blocks - Due End of the Year
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2. (SBU) In June, 2007 the GOB launched its offshore oil
exploration licensing round for 24 off shore blocks. Bidding
rules have just been published, offers are due in November -
December, 2007 and contracts are expected to be awarded in
December or January, 2008. According to press reports, over
60 companies (including U.S. firms like Chevron, Marathon,
and Exxon-Mobile),have expressed preliminary interest in
bidding for the blocks. In a Press release announcing the
launch, the Minister of Energy emphasized that oil companies,
rather than the government, would be financing the oil
exploration projects. The government would receive revenue
from fees charged on the bidding process and subsequent
developments. The Minister also noted that the country's
expenditure on energy has jumped from $175 million to $450
million annually. Barbados currently produces 1,000 bbl of
crude oil a day from onshore sources (about 15% of
consumption).


3. (SBU) Our interlocutors told us there was strong industry
interest in the grid. They did note however that neither the
Mexicans or the Venezuelans were considering making bids at
this time. They also pointed out that it would be at least
eight years before any large scale production could come on
line. The oil would also have to be refined offshore in
Jamaica, Trinidad, the U.S., Mexico or Venezuela as Barbados
lacks any refining capability. If the fields become
productive, our contacts say, Barbados could be a significant
oil exporter, since no company would bother bringing fields
on-line unless there was significant production possibility,
owing to the relatively greater cost of drilling in the deep
seas off Barbados.


4. (SBU) Our interlocutors also discussed the possibility of
developing alternative energy in the region, including
biodiesel. They noted that the current best prospects were in
wind, natural gas (again depending on the outcome of
geological surveys of the offshore grids),and geo-thermal.
They cautioned, though, that there was still significant
opposition in many communities to large-scale generation
fields onshore, owing to perceived damage to tourism and more
generalized aesthetic concerns. They concluded that, with
the exception of biodiesel, which had potential ancillary
political benefits in the agricultural employement area, the
cost-benefit calculation for new energy sources in these tiny
economies would likely favor oil over alternatives for the
foreseeable future.
FISHER