He added, however, that even though a mini oil refinery is being imported to process the oil to make diesel, ?I don?t think it is a full refinery and I don?t even think that that is the way we should go as a country, that Belize should think in terms of putting a huge refinery here.?

He told us that, ?From my discussions with company officials, what they are telling me is that in terms of converting what we have in the ground to diesel, it should not require any major refining plant at this stage. So what I believe they will be importing is what they call a topping up plant, which is a mini refinery??

Why does the Prime Minister favor oil exportation over refining the oil locally? The explanation he gave us is that ?We have to look at the ecology situation, the environmental issue and also in terms of what kind of Belize we want for the future,? he said. ?I believe that our natural resource and our plant life, our marine life, the terrestrial flora and fauna is still the greatest resource we have after the people of Belize.?

Musa said that oil importation at current prices has strained the economy by draining $50 million of the country?s foreign exchange and causing $25 million in losses from Central Government.

On the other hand, there are Belizeans who feel that refining oil in Belize could help ease prices and even drive the cost of power down for Belizeans. If the oil were exported, the country would have to continue to purchase on the foreign market at world market prices.

Musa said that with BNE exporting oil, the foreign exchange situation will reverse somewhat, since oil proceeds will flow into Belize. But is that really so? Ordinarily, foreign investors tend to keep much of their earnings outside Belize. The Prime Minster argues that Belize will benefit through tax collection.

?Money is viscous, just like oil. I can?t tell you that all the money the company makes will come back,? he conceded. ?Obviously, they?ll have to use some for other investments, which means, of course, buying expensive equipment and so on, but in terms of the revenue side, that will come back in terms of the production sharing in terms of the sales tax and later on the GST, and later on the business tax. That definitely has to be paid in Belize.?

As to what the Government of Belize is getting out of the present production sharing agreement, the Prime Minister said that the 7.5% in royalties being paid to GOB is the lower end of what governments collect in the region. He said that it was not his decision, but that of the technicians.

?This is done in the context of, 50 years we?ve been searching for oil, didn?t find any, so we have to provide an incentive, if you like, for people to come and explore?? he told us. ?It is on the lower end of production sharing agreements in the region, compared to say, Guatemala?but Guatemala has found oil in commercial quantities.?

The Prime Minister could not say for how long GOB would be bound to the production sharing agreement, but he told us that the percentage of royalties stipulated in the agreement is not important, really.

?In a sense that?s not the important issue, because the Government can also get additional revenue through the tax system. I mean, no contractual party can bind us to what taxes we charge. We have a sovereign right to charge taxes,? P.M. Musa added.

Apart from the potential to bring more jobs, oil production in Belize, he said, can have a lot of other positive impacts on the Belizean economy?maybe even improve the country?s ratings on international financial markets.

?I think it will go a long way in helping us to address our debt situation and in fact, the very fact of finding oil creates a psychological climate in terms of the markets and you know, whether we like it or not, we have to deal with the markets, so all those factors are important in terms of what it does for the future of the economy of Belize.?