Belize's Oil Banning: A Decade Of Change

Belize is the first country in the world to ban all offshore oil exploration and drilling. The legislation was passed on December 30, 2017, and marked a significant victory for environmentalists and conservationists who had been campaigning for such a ban for years. The ban is intended to protect the Belize Barrier Reef, a UNESCO World Heritage Site and the second-largest barrier reef in the world, which supports a diverse array of marine life and is critical to Belize's tourism industry.

The campaign for the ban was led by Oceana, a non-governmental organization, and the Belize Coalition to Save Our National Heritage, which comprised almost 40 local and international partners. The movement gained momentum in 2016 when a seismic ship was spotted off the coast of Belize, sparking public outrage. Despite some opposition and challenges along the way, the ban was ultimately passed with bipartisan support, demonstrating the power of public advocacy and the importance of protecting our planet's oceans and natural resources.

Belize Natural Energy (BNE)

In 2003, BNE signed a production-sharing agreement with the Government of Belize, and in 2005, oil was discovered at the Mike Usher No.1 well in the Mennonite agricultural community of Spanish Lookout in Western Belize. Since then, BNE has established itself as a leading energy company in Belize, spanning the full range of oil and gas activities, from drilling and geology to gas processing and branding.

Currently, BNE produces approximately 2,000 barrels of crude oil per day, 1,800 gallons of Liquefied Petroleum Gas (LPG), and 160,000 cubic feet per day of fuel gas for electricity generation. In addition, BNE has drilled over 62 wells, discovered and developed Belize's only two commercial oil fields, and shipped 153 cargoes of Belize Light Crude Oil and Never Delay Crude Oil to international markets.

BNE is committed to the efficient management and production of these fields through the use of the latest in seismic exploration technology and drilling methods. They utilise a state-of-the-art control room to monitor their fleet of tanker trucks, which are tracked via satellite to ensure safety and security.

In 2009, BNE discovered the Never Delay Field (ND) in an area known as Never Delay to the Northeast of Belmopan, and work to optimise production from this field continues.

BNE has contributed significantly to the Belizean economy, including training local employees in oil and gas operations, selling 10% of crude production to local industries, and contributing over USD 240 million in government revenues.

Oil discovery and extraction

Belize's oil discovery and extraction history is a story of both success and failure. The first discovery of petroleum and gas deposits in Belize was made by Belize Natural Energy Ltd. (BNE) in 2005, with the first well in Spanish Lookout producing 5,000 barrels per day. BNE's success came after most major oil companies had tried and failed to find oil in Belize over the previous 50 years.

The discovery well and two confirmations—Usher 1, Usher 2, and Usher 3—were named after Mike Usher, a Belize engineer and the biggest believer in the country's petroleum potential, who died before drilling began. BNE's success attracted the interest of other companies, and by 2018, 18 different companies had been granted petroleum concessions across Belize's territory and offshore waters.

However, oil exploration in Belize has also faced challenges and setbacks. In 2013, the Supreme Court declared all offshore oil exploration contracts issued by the government of Belize null and void. Additionally, there has been public disaffection in Belize over oil drilling, with concerns about its potential impact on the environment and the country's tourism industry. In response to these concerns, in 2018, Belize's government announced bold legislation to end oil activity in all its waters, becoming the first developing country to take such a step. This decision was hailed as a huge step forward in protecting oceans and marine life, particularly the fragile Belize Barrier Reef World Heritage site.

Oil exports

Belize's oil exports have been a contentious issue for the country, with a movement led by environmental organisations and civil society questioning the government's decision to allow oil drilling in the sensitive Barrier Reef World Heritage Site zone. In April 2013, the Supreme Court declared all offshore oil exploration contracts issued by the government of Belize null and void.

In 2022, Belize exported $22.4 million worth of mineral fuels, including oil, which accounted for 7.8% of the country's total exports. Belize Natural Energy (BNE) is the only company producing and exporting oil from Belize and holds one of the 18 contracts allocated to different companies.

The history of oil exploration in Belize dates back to the 1930s, with Shell being the first company to obtain an exploratory license in 1938. However, exploration efforts over the years by major oil companies have mostly been unsuccessful.

In 2010, Belize exported $441,915 worth of mineral fuels, including oil, which was an increase from the previous year. The country's exports of mineral fuels, including oil, continued to grow, reaching $257.5 million in 2021 and $286.4 million in 2022.

Belize's top export destinations for mineral fuels, including oil, in 2022 were the United States (24.9% of Belize's global total), the United Kingdom (20.2%), Guatemala (11%), Honduras (6.9%), Spain (6.4%), Trinidad and Tobago (5%), Jamaica (4.7%), Ireland (3.9%), Mexico (2.5%), and Taiwan (1.5%).

Oil taxation

The discovery of oil in Belize has been a potential windfall for this poor, underdeveloped Central American country. However, there are concerns about how the government will manage the newfound resource, with worries about mismanagement and the destruction of Belize's pristine wilderness.

The government of Belize has imposed large taxes on oil producers, which has caused unease among US oil companies, who argue that this may hinder the industry's development. The proposed 40% income tax on oil companies, in addition to other profit-sharing costs, means that the government's take would exceed 60% of net production. This has caused consternation among foreign oil companies, who believe that the high taxation may prevent the industry from flourishing.

The taxation issue has led to a stand-off of sorts, with all new wildcat drilling projects to search for additional oil reserves being halted. Oil companies are reluctant to invest and explore further until the taxation issue is resolved. This situation highlights the delicate balance between a country's desire to benefit economically from its natural resources and creating a favourable environment for the industry to thrive.

The taxation dispute has also revealed the differing perspectives of the government and oil companies. The Belizean government, under pressure from its citizens, feels the need to maximise revenue from the country's oil resources, especially given the potential environmental risks associated with drilling. On the other hand, oil companies argue for lower taxes to ensure the industry's viability and their ability to continue exploring and producing.

The resolution of this impasse will be critical in determining the future of the oil industry in Belize and the country's economic trajectory. It remains to be seen whether a compromise can be reached that satisfies both parties and ensures the sustainable development of the country's oil sector.

Oil exploration

Petroleum exploration in Belize began in the 1930s, with oil exploration licenses granted to large oil companies such as Shell, Esso, and Texaco, as well as smaller companies. Many two-dimensional seismic surveys were conducted, with most of the surveys done in the offshore waters of Belize. The first exploration well in Belize was the Yalbac #1 well, drilled by Gulf Oil in 1956. Up to 2000, a total of 50 exploration wells were drilled, 34 onshore and 16 offshore. No commercial discovery was made in any of these wells, although some had minor oil shows.

In 2000, an oil seep was discovered at 130 feet in a water well drilled at Calla Creek in the Cayo District, sparking new interest in Belize. This resulted in the granting of an exploration license to Belize Natural Energy Ltd. (BNE), which made the first commercial discovery of petroleum in July 2005 in Spanish Lookout in the Mike Usher #1 well. The oil discovered in Spanish Lookout is a light crude oil with an API gravity of 40°. BNE later made another commercial discovery in October 2008 in the Never Delay area in the Never Delay #1 well. This crude oil is also similar in density to the Spanish Lookout crude oil. BNE is the only producer of crude oil in Belize.

In addition to BNE, there are currently two other companies that hold exploration licenses in Belize and are carrying out exploration works. These companies have up to eight years to explore for oil and 25 years to undertake production and pump oil commercially. If no oil is found within the eight-year exploration phase, the contract is no longer in effect.

In the wake of the BP Gulf of Mexico oil spill, a movement emerged in Belize to ban offshore drilling, led by environmental organizations and civil society. This movement questioned the government's decision to allow oil drilling in the sensitive Barrier Reef World Heritage Site zone. In April 2013, the Supreme Court of Belize declared null and void all offshore oil exploration contracts issued by the government.

Despite the ban on offshore oil exploration, there are still some oil exploration activities taking place in Belize. In May 2022, the Belize Geology and Petroleum Department reported that exploration companies such as FCRL Belize Ltd. and US Capital Belize had put forward programs for extensive data analysis, seismic programs, and drilling and testing campaigns. These work programs are time-sensitive and aim to eliminate risk while commercializing new fields.

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