Sweet crude has proved to be big money in Belize. Official data indicates that Belize Natural Energy (BNE), the only company producing crude in Belize, has exported more than half-a-billion dollars worth of oil since the find in Spanish Lookout, Cayo, was declared commercial back in 2005.
By law, the petroleum belongs to the Government and people of Belize, but revenues are split based on a Production Sharing Agreement. Latest figures from the Ministry of Finance indicate that government earnings have tallied $100 million since oil was struck, a fifth of total earnings.
This week, news came, ironically from abroad, that another location in Cayo, at Never Delay, near Belmopan, has been declared commercial, and the Spanish Lookout Field has been determined to have more than $3 billion worth of oil—triple the volume originally estimated and enough to pay off Belize’s entire debt.
Rather than celebration, though, the news has been met with skepticism and anger in some quarters, because the information came to light only after it was published in Ireland—no one breathed a word of it here in Belize.
The sharing of the financial pie has been disappointing to both the masses of Belizeans, as well as some Irish shareholders, some of whom had resorted to blog postings to vocalize their concerns. Before we detail those, though, we first turn back to the happenings on the home base.
Belize stood to make its best earnings from this Spanish Lookout “black gold” in 2008, when crude oil prices (per barrel) shot past the US$100 mark to reach record highs. A windfall tax promised by the Barrow administration to boost Belize’s oil revenue earnings reaped an empty harvest, however, because as soon as the tax was implemented, market prices fell below the US$90 a barrel benchmark fixed in the law.
Official information to our newspaper indicates that in 2008, BNE, which employs 163 people, grossed a record $230 million in revenues. By contrast, the Government of Belize’s earnings were only a fifth of that, at $47 million.
Just as some Belizeans are unhappy with the lower percentage share government gets for the crude, some shareholders of BNE, and the parent company, International Natural Energy (INE), are also concerned despite a Christmas pay-out of US$10 million dividends. That’s because despite the profitability of BNE, the dividend payment is recorded as a loan to shareholders.
BNE chairperson, Susan Morrice, a geologist, said in a New Year’s notice that, “Over the past 7 years the membership has realized over 19 million dollars [US] in profits, through transactions, from an initial 5-million-dollar [US] investment.”
Up to September 2009—when oil revenues fell by more than 50% due to lower world market prices—BNE had reported gross earnings of $130 million. Out of that, GOB’s receipts were $25 million—less than a fifth of gross.
Income tax collections from oil proceeds have been far lower than projected: Government had projected income tax receipts for the 12 months spanning April 2008 to March 2009 (the financial year) to be $40 million. Instead, it took GOB 21 months, from January 2008 to September 2009, to collect that much in income taxes from BNE. Furthermore, there were never any receipts from the ineffective windfall tax implemented that year.
BNE CEO, Dr. Gilbert Canton, claims that BNE is audited by both government revenue departments and private auditors. GOB got even more money than it ordinarily would have in 2009 because BNE suspended its exploration activities, which would have meant more spending, for much of 2009, he claimed.
BNE intends to go all out this year, 2010, to find new oil fields within its concession area, as it has only one more year, under its current contract with the Government of Belize, to conduct exploration.
The concession block originally spanned areas of the Cayo District, from the Western Border with Guatemala to the Belize River Valley area, including Bermudian Landing Village.
Canton confirmed to Amandala Thursday morning that two wells at the Never Delay site in the Cayo District have produced promising results, and though market prices are not as good as they were previously, the company had decided back in November to declare it commercial—though full production is awaiting clearance from the Department of the Environment.
Dr. Canton told Amandala Thursday (today) that 5,000 to 6,000 barrels of petroleum were extracted from the two wells during the testing phase.
BNE’s milestone, posted on its website, says that BNE struck oil at Never Delay in October 2007. However, there was no news locally about the declaration of a commercial find, and Belizeans did not learn of it until a news publication was released this week in Ireland—the home of BNE’s chief investors.
The Geology and Petroleum Department has informed Amandala that a commercial declaration was made by BNE on November 5, 2009.
We asked Canton why no announcement was made to Belizeans. To this, he replied that oil is such a controversial issue and often debated that they wanted the government to be the one to make the disclosure.
According to Canton, the company decided to declare it commercial, even though comparatively speaking, the flow was “marginal,” producing 30 to 40 barrels a day when they were testing before November 2009.
Apart from the commercial find at Never Delay, though, the other bit of news is that the Spanish Lookout reserves are almost three times as big as had originally been projected—20 million barrels, worth US$1.6 billion (BZ$3.2 billion) at today’s prices, and not the 6 million barrels initially reported.
Despite the good news for the industry, some unhappy Irish shareholders in Belize Natural Energy’s parent company, International National Energy, are claiming that they had been hoodwinked out of a real profit sharing arrangement.
There are also reports that the ascension of Tony Quinn, the controversial mind science guru, nicknamed the “Mucky Messiah” by some of his adversaries, have created a stir among shareholders after reports surfaced that he had been gifted with over $20 million shares in INE/BNE, for having purportedly inspired the BNE oil find in Belize through his mind science technology.
INE posts on the top of its homepage on the internet, a link to a news report appearing on Tuesday, January 12, in the Belfast Telegraph, an Irish media organ, titled “Baroness of the Belize oil fields,” and describing Morrice as “laughing all the way to the bank.”
The article claims that BNE had paid out up to US$750,000 to some shareholders from a pot of US$10 million over the Christmas. This represents the first payout to shareholders since they invested their monies several years ago, but it was interestingly made to them in the form of a loan.
When we asked Dr. Canton to explain this transaction, he described it as an advance against future company profits. He said that BNE had been aggressively re-investing revenues back into the oil fields.
While Canton defended BNE as a responsible and serious investor in Belize, communications between shareholders revealed the extent of their concerns, including sentiments that Morrice and Quinn are running BNE like their “private piggy bank”:
“We have to borrow our own money back from a profitable company?” a shareholder lamented, in response to the dividend payout being made as a loan. There were also reports that shareholders were being asked to turn in their share certificates to get the “loan,” and some shareholders wonder if they would end up losing their shares in BNE as a result.
Canton claimed, though, that since shareholders had been trading BNE shares and apportioning some to relatives, in some cases, the recall was made on share certificates to do a reconciliation of shareholders and issue proper certificates. He said that to his knowledge, it was not tied to the dividend payment.
The sentiment was expressed by one shareholder that even with a new oil find, they still can’t get their dividends from BNE, 9 years after some made their initial investment in what has been described in foreign media as a billion-dollar company.
In her New Year’s reflection, Morrice told her business partners that, “…the Loan Release Program provided almost 10 million dollars [US] to the members during this Christmas holiday period.”
The BNE chairperson also said, “This unheard of success and global reputation of the company has all been possible due to the critical involvement of Dr. Tony Quinn and the Educo seminars.”
Morrice, described as a disciple of Quinn, said that “over 90% of BNE’s shares are held by 330 Educoists – persons who have been on Quinn’s mind science seminars.”
(Quinn’s Educo Gym has also been established in Belmopan, Belize.)
Inside INE/BNE, there has been a rift among investors, which became evident at last year’s annual general meeting, in Dublin, Ireland.
Canton told us that he had attended the Dublin AGM, but was only concerned with delivering a presentation on the progress of the company. When we asked him about reports that Quinn, reportedly based in the Bahamas, had been gifted US$24 million worth of BNE shares, he said he could not comment because that was “INE business.”
Concurrently, Ireland media report that Quinn is being sued by a client of 25 years, Maire Lalor, who claims sexual assault, battery and fraudulent misrepresentation.
Quinn became well known in Belize when he gave a “motivational seminar” at a retreat of Government ministers under the Musa administration in 2006, held on the island of Caye Chapel.
Some shareholders unhappy about Quinn’s ascension to the BNE board as part shareholder question the legality of the move and ask what legal authorities in Belize are doing about it.
Canton told us that despite what is being said by “disgruntled shareholders,” the situation is win-win for all parties.
The CEO said that the company presses ahead with its exploration and production work, and it intends to make capital investments of US$25 million this year, as it looks for new oil prospects and purchases its own drilling rig, an estimated US$6 million investment, so it will no longer need to lease from abroad.
In August 2005, after Spanish Lookout was declared commercial, it was producing at 500 barrels a day. Today, with 10 Spanish Lookout wells, production has averaged 4,600 barrels a day, according to BNE information. The company plans to drill at least one additional well in Spanish Lookout this year, as it searches for oil elsewhere on lands in the Belize and Cayo Districts, over which its concession spans.
Former BNE director, Sheila McCaffrey, who was one of the earlier operatives in BNE, is off-the-radar, no longer actively involved with BNE, though Amandala is informed that she remains a shareholder.
Canton, the BNE CEO, told our newspaper that currently, Belize’s sweet crude is exported to RECOPE in Costa Rica, a national refinery owned by the government there.
Sometimes, said Canton, the Gulf Coast (US) wins the bid for the sale of Belize sweet crude on prices that look ahead by 6 months.
While INE/BNE is owned vastly by Irish investors, a Belizean, Patty Usher, the wife of Mike Usher [after whom the Spanish Lookout wells were named], is a shareholder in the company, Canton notified, when we asked him about Belizean partnership in BNE.
Via a joint venture arrangement, BNE has a 54% working interest in the oil field, the Government of Belize owns 10%, and CHx of the USA owns 36%, he added.
CHx, an affiliate of Aspect Holdings, a company owned by Morrice’s husband, Alex Cranberg in the USA, partners with BNE in Belize. It has a Guatemalan counterpart, CHx Guatemala Limitada, among other sister companies.
The Said Musa administration, in power at the time, took the position that Belize should export and not refine oil.
Canton told us today that out of the 4,600 barrels a day, produced on average from the Spanish Lookout field, about 900 barrels stays in Belize. Canton said that some goes to the Mennonites in Little Belize for refining, some to Cuellos and Travelers, as well as Citrus Products of Belize Limited for their operations. Blu Sky Belize also processes Belize crude, and supplies Barry Bowen enterprises, plus exports some of the “blended stock” of crude to Guatemala.
Meanwhile, Belizeans still rely on imported petroleum and petroleum products, which make up the second biggest item on Belize’s import bill, tabbed at roughly $200 million, following behind machinery and transport equipment.
According to the Belfast Telegraph article, some geologists claim the country as a whole could produce 50,000 barrels a day.
According to Canton, this is the most critical year for BNE for finding oil, as any part of the concession area where it does not find oil will have to be relinquished at the end of 2010. Minimally, it gets to keep the Spanish Lookout and Never Delay portions of the concession, where commercial finds have been declared. They are allowed to continue production for the next 25 years, he explained. However, BNE is not giving up and is maintaining its proposal to the government to renew its concession license for exploration.
At his October 30, 2009, press conference, Prime Minister Dean Barrow had expressed optimism that Gallon Jug could be the next big news for the oil industry in Belize: “All the experts say that if there is oil in this country, it is there and that if oil is there it is a lot of oil that is there.”
Gallon Jug, an area where the wealthy Barry Bowen reportedly has his estate of over 100,000 acres and where Programme for Belize has interests, is within the concession area of RSM Production Corporation, whose address is Greenwood Village, Colorado, USA.