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Should Seychelles keep it in the ground? Finance minister responds to oil exploration concerns

Victoria, Seychelles | June 15, 2015, Monday @ 10:38 in Editorial » ANALYSIS | By: Hajira Amla | Views: 5013
Should Seychelles keep it in the ground? Finance minister responds to oil exploration concerns

File Photo: offshore oil platform (Agência Brasil/Wikimedia) Photo License: (CC BY 3.0 BR

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The warm azure waters of the Seychelles archipelago are likely to soon become the latest site for hydrocarbon test drilling in the Indian Ocean, but a local environmental education consultant has called for a national debate to be opened up as to whether the small island state would lose credibility in the international community by doing so.

However, the Seychelles Minister for Finance, Trade and the Blue Economy, Jean Paul Adam has responded to the concerns by arguing that environmentally sensitive areas within the Seychelles’ vast Exclusive Economic Zone (EEZ) were at much greater risk by activities already present in or close to its waters, such as badly-maintained oil cargo ships traversing the region and offshore drilling in other countries bordering the Seychelles EEZ.

The plateau beneath the 115-island archipelago, situated in the Indian Ocean some 1,500 kilometres off the eastern coastline of Africa, was thought to contain large quantities of hydrocarbons since the early 1990s, when several initial assessments were carried out.

In 2012, the US Geological Survey (USGS) concluded an oil survey of the western Indian Ocean region including Seychelles, Tanzania, Madagascar and Mozambique, estimating a total of 793 MMbls (millions of barrels) to be present in the Seychelles rift area.

Since then, all of the countries surveyed have started drilling and extracting offshore oil - all except the Seychelles, which imposed a two-year moratorium on all exploratory activities, subsequently opening up oil exploration blocks to bidding companies in June 2013 after the moratorium had elapsed.

Map showing the existing exploration blocks in the Seychelles rift, including new applications for two new large blocks which opened up for bidding recently (PetroSeychelles) Photo license: CC-BY

The government used the freeze to its advantage, putting legal instruments and frameworks in place to prepare for the discovery of oil in the archipelago of 90,000 people, which currently relies mostly on tourism and fisheries for its foreign revenue streams.

The small island developing state decided to adopt best practices from countries with successful extractive industries such as Norway, and they also launched a bid to become part of the progressive Extractive Industries Transparency Initiative (EITI).  

At the time of the Seychelles exploration embargo, WHL Energy an Australian firm and Afren Plc held offshore Seychelles petroleum exploration licenses. Early in 2014, Ophir Energy, a UK-based energy company, was farmed in to earn a 75 percent interest in WHL’s Seychelles stake.

The latest preliminary data emerging from Ophir’s 3D seismic survey conducted in mid-2014 revealed a best estimate of 500 MMbls from the Junon exploration block situated to the south-east of the main Seychelles island of Mahe.

Should Seychelles ‘keep it in the ground’?

As the ever-approaching moment for test drilling looms, many Seychellois wait anxiously, wondering what the future will hold for the breathtakingly beautiful country. The population here is largely aware that their futures are all linked to the sea and its many bounties, and wonder if the coming of big oil will be a blessing or a curse.

The 115 pristine islands of the Seychelles archipelago, some constituted of granite rock, are a prime tourist attraction (Gerard Larose, STB) Photo license: CC-BY

According to a recent global survey called Worldwide Views on Climate Change, a significant proportion - 53 percent - of Seychellois participating the survey also felt that all exploration for fossil fuels should be halted, compared to only 45 percent of the participants in the rest of the world.

The island nation has long been representing itself and other SIDS on the international scene as a vocal advocate for action against climate change, demanding that industrialised nations start to take responsibility for their appetite for fossil fuels and the effects it has on small island states, such as sea level rise, ocean acidification, coral bleaching and coastal erosion.

Speaking in her personal capacity in an interview with SNA, local environmental education consultant Dr Michele Martin, said she felt that the government’s journey towards oil extraction seemed somewhat at loggerheads with its pro-environmental sustainability position.

The Seychelles has protected over 50 percent of its terrestrial land as natural reserves and announced as part of its Marine Spatial Planning exercise that it would protect 30 percent of its 1.3 million square kilometre EEZ from commercially extractive industries, including fisheries and oil drilling.

Inspired by the 350.org global campaign called ‘Fossil Free’ and the UK’s Guardian newspaper’s ‘Keep It In The Ground’ campaign, both of which aim to get companies and individuals to divest from fossil fuel investments, Martin said the movement was focused on finding ways of shifting away from fossil fuels towards renewable forms of energy to try to keep rampant global warming under control.

“On the government’s part you can see the motivation, but on the other hand, when you look at Seychelles, we’re out there on the international scene at all levels, NGOs, civil society, the government, promoting ourselves as an eco-friendly nation, we’re promoting conservation and the climate change movement,” she told SNA.

“I think that when push comes to shove and we start exploring for oil it’s going to be quite embarrassing for all of us. How can we be out there lobbying for action against climate change and at the same time we’re exploring for oil?”

“It’s funny because to me, even our credibility as a nation that’s putting ourselves out there, caring about climate change and then being the same country that’s inviting companies to come and explore for oil and maybe drill for oil, it’s completely at loggerheads with each other, so we should have a public debate about it to see... sometimes people make the trade-off and they say we want that and we’re willing to take... the environmental risk, but then we will down the road have to stop advocating for climate change action because we’ll be a bigger contributor towards it,” she said.

“Civil society will have to speak out, and maybe civil society [eventually] says ‘go ahead, we understand the risks and we’re willing to do it’, but I think we should be part of the conversation.”

In an emailed statement to SNA, Global Communications Manager for the climate change campaign group 350.org, Hoda Baraka said, "the end of fossil fuels is upon us. Financial and political indicators are confirming the imminent transition towards 100 percent renewable energy. Small island nations such as the Seychelles are best disposed for this change by both protecting their very livelihoods and also become leaders in the dawn of renewable energy that is already upon us." 

Benefit to the blue economy

SNA reached out to the Seychelles minister responsible for the ‘Blue Economy’ - the concept of sustainably utilising the ocean’s resources - government department, Jean Paul Adam, who also holds the portfolios of Finance and Trade, to hear his views on the matter.

“I don’t see it as being at loggerheads, but I think first of all we have to look at the particular context of Seychelles’ economy,” he said. “The approach that we’re taking does fit in with the message that we are putting out on sustainable development... that we are looking at oil exploration as part of the blue economy, it’s not something separate, and it’s not something that we’re going to rush…”

Minister Adam said that although Seychelles as a SIDS still needed to diversify its small economy, which is still vulnerable to external shocks, any potential revenue generated from oil extraction had not yet been factored into any of the country’s budgetary projections.

“First of all it’s because oil is too volatile for us to be able to predict properly in terms of pricing, and secondly even though we are certain that there is oil there we don’t actually know yet that it is in commercial quantities – we’ll only know that when we actually do the actual [test] drilling.”

Aside from the monetary benefits, Minister Adam said that the data generated from the seismic surveys were invaluable to Seychelles in the development of its blue economy plan.

Minister of Finance, Trade and the Blue Economy, Jean Paul Adam (Seychelles News Agency) Photo license: CC-BY

Environmental risk is ‘already present’

According to the finance minister, the risk from oil spillage and other environmental impacts from the industry are already present in the Seychelles.

“We have to keep in mind as well that we are situated in the Indian Ocean, which is a hotspot for oil exploration right now in the world, as well as for drilling for oil. Every single one of the continental countries that we have maritime borders with, including Madagascar, are all drilling for oil, and they are already pumping it out,” he said.

“On top of that, two thirds of the world’s oil shipments by cargo ship go through the Indian Ocean, and quite often within 50 to 60 nautical miles of very sensitive environmental areas for Seychelles. So the risk for example that is involved in drilling for oil in Seychelles, I would say is no greater than the risks that already exist… from oil fields that are in proximity to our EEZ. So the risk that may exist from oil spills linked to drilling is already there. By drilling in Seychelles, you will not necessarily be increasing the risks exponentially.”

“Secondly, and for me what is the greater risk, is the huge amount of tanker traffic in the Indian Ocean, and unlike for example the European Union, which has put down a rule that only double-hulled tankers can trade oil within the EU, we don’t have this rule in this region - there are a lot of old rustbuckets out there transporting oil, and frankly I’m much more concerned about that than I am about the risk from drilling for oil.”

According to the World Water Encyclopedia, it is estimated that approximately 2.6 billion litres of waste oil enter the world’s oceans every year, with over half of this coming from land drainage and waste disposal sources, such as improperly disposed-of motor oil.

Less than 8 percent of the oil comes from offshore drilling operations and oil tanker or ship spills. Offshore oil spills or leaks sometimes occur during various stages of well drilling or repair operations, and can also occur while oil is being transferred from offshore wells onto oil tankers. These stages can occur while oil is being produced from offshore wells, handled, and temporarily stored; or when oil is being transported offshore, either by flowline, underwater pipeline, or tanker.

In April 2010, the explosion and collapse of the Deepwater Horizon offshore rig in the Gulf of Mexico caused an 87-day long sea floor spill, considered as one of the largest and most devastating accidental marine oil spills in human history.

The possible detrimental effects of drilling and seismic surveys on marine mammals last week also came to the fore, with a controversial application document submitted to the United States National Marine Fisheries Service (NMFS) by Shell with regards to a proposed US oil drilling project in the Arctic.

The document claimed that continuous noise generated by drilling, seismic surveys and ice-breaking could deafen whales, which rely on sound to communicate and navigate.

The Sainte Anne Marine National Park is a no-take reserve popular with tourists to the Seychelles islands (Gerard Larose, STB) Photo license: CC-BY

An opportunity to fund renewable energy

According to Adam, although drilling for oil poses a risk for all countries, he says the world is not yet able to produce 100 percent of their energy requirements from renewable sources, and says that extracting oil, which would be exported and refined in other countries, could eventually fund a larger renewable energy programme in Seychelles.

“Absolutely, the moral imperative to go towards zero carbon emissions is one that Seychelles absolutely supports, but the problem I think, and this is too often lost in negotiations, is that we talk about the goal, but we don’t put the means of how to get there,” he explained.

“I’ll give you a practical example in the context of Seychelles: we’ve created these marine protected areas, and we also want to invest in renewable energy - how are we going to fund these things?”

At the 2009 COP15 conference in Copenhagen, billions of dollars were pledged to help developing countries move towards a low-carbon economy, but the correct financial modalities were not put in place to ensure that the money went to the middle-income small island states like Seychelles.

With Seychelles’ small population and relatively high debt-to-GDP ratios, the country has to rely on grants and subsidies to put renewable energy programmes in place. One such project was subsidised by the government of the United Arab Emirates for eight wind turbines, which currently produce just over 2 percent of Seychelles’ total energy needs.

“We have got to recognise that the world’s economy is still a carbon economy. Now the approach that countries like Seychelles is taking is saying we have to reduce the impact of that carbon, but we have to be realistic in knowing that it’s going to take a while, for all the countries, even the countries that are the most advanced in terms of renewable energy, are still only at about 50 percent of their needs from renewables,” said the minister.

“If Seychelles was to find oil, we could actually be 100 percent renewable, we can actually achieve that using our own resources, so the question of resources is fundamental to the debate and it’s not being addressed adequately in the international scenario,” he said.

The minister said that Seychelles must take stock of the benefits and disadvantages of all its extractive industries, including fisheries.

Supportive of the ‘moral’ argument

In 2012, the government of Ecuador, which is primarily a petroleum-based economy, agreed not to exploit an estimated 846 MMbls of oil beneath the ecologically sensitive Yasuni National Park in return for a financial incentive from the United Nations of $3.6 billion in estimated lost revenues.

Minister Adam is open to the idea of engineering a similar deal for commercial oil resources beneath the Seychelles’ pristine blue seas, but warns that test drilling would first have to take place to establish the existence of commercial quantities of oil.  

“Certainly, for Seychelles, this is something we could do, but until you’ve actually done your test drill, you’ve got no bargaining position, because you have no proof that is has value, and until then you can’t enter into that kind of discussion,” he explained.

“Certainly I think at the point at which we would have that proof, it’s worth putting it across and saying well, what’s it worth to keep it in the ground versus actually taking it out of the ground.”

“So the question of keeping it in the ground, I support it from a moral standpoint, but from a Blue Economy ‘how do we get there’ standpoint, I think there are some serious questions which have to be addressed which keeping it in the ground doesn’t address,” he added.

“Not increasing oil production globally is an option, certainly, but it’s not the one that’s actually going to make the difference and actually bring us to a solution at this point,” he postulated. “From a moral perspective it makes sense, but if we’re really looking [at] how do we move towards a blue economy, I don’t think that now is the right time for us to say ‘we’re going to keep it in the ground’.”

Minister Adam said he welcomed the debate from all interested parties, and said he was looking forward to the discussions which would be generated as part of the EITI workshops and consultations currently taking place.

He also said that the people of Seychelles’ opinions did matter and would be taken into consideration, but cautioned that all the science-based information should be presented and taken into consideration before taking a moral stance.

“So in the context of if you ask somebody who is very environmentally conscious, do you think oil is a good thing? I myself will also say no,” he said. “In the context of Seychelles, where we want to move towards a blue economy, we have 1.3 million square kilometres and development of those resources are going to cost money and we also very importantly have to reduce the existing risks - I think when... you put all of the information in front of the same respondents that maybe previously expressed reservations, there may be a different outcome.”

“I would say that just closing one tap while there are a hundred taps still on doesn’t necessarily help us, but I think that from the perspective of the government we are open to all arguments; it’s not a closed debate… we can continue to discuss it and we can continue to take all points on board,” he continued.

“The moral argument in saying that Seychelles is a leader in marine protection, that means that we shouldn’t develop oil. If we say that then we should say we shouldn’t have fisheries as well. The fact that man has an impact on the environment is a reality. How do we reduce the impact, for me, is the question.”

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Tags: oil exploration, oil extraction, offshore drilling, WHL Energy, Afren, Avana, Ophir, Jean Paul Adam, climate change, fossil fuels, global warming, oil spill

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