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The long search for oil: Dare we begin to hope again?
Map showing offshore plays in Jamaica
Editorial
July 12, 2024

The long search for oil: Dare we begin to hope again?

After almost eight decades searching for oil on and offshore Jamaica, the people behind the latest phase of the exploration, while clearly trying to contain themselves, are behaving suspiciously as if they know something the rest of us are waiting to hear.

Earlier this year, British-owned United Oil and Gas and the Jamaican-owned Petroleum Corporation of Jamaica (PCJ) took the bold step of organising an “investor evening” at Jamaica’s High Commission in London.

It was the biggest indication yet that the principals are ready to sign partnerships for commercialisation and production of the estimated 7 billion barrels of oil that they have apparently confirmed in Jamaican territory.

The news has been slow to trickle back to Jamaica and has certainly not hit the front pages. But those who have been doggedly following the search, which began officially in the 1950s, would have noticed that the excitement has reached levels not seen before.

Spokespersons have not been sparing in their use of superlatives to describe the potential volume of oil the explorers believe they may have found along the entire south of the island which they call the Walton-Morant Licence.

For example, consultant Iman Hill says the Jamaican reserves cover “a massive acreage — 22,400 square kilometres or the equivalent of 3½ million football pitches” and “we are now looking at early commercialisation”.

Brian Larkin, CEO of United Oil and Gas, previously Tullow Oil, believes the potential value of the Jamaican reserves is “double the islands gross domestic product” and “game-changing”.

United Oil has been quoted as saying the largest repository within its wider zones of oil exploration offshore Jamaica was potentially worth $3.5 trillion (US$23 billion), “at 100 per cent working interest over the 25-year production life of the licence, at current oil prices”.

The fact that there is still need to prove that substances that resemble oil are indeed oil, and will require investments to drill for core samples, has not dampened enthusiasm in London or Kingston.

They believe that the Walton-Morant Licence is comparable to Starbroek in Guyana, which has been enjoying unprecedented GDP growth since discovery and development of oil reserves by ExxonMobil in 2015.

United Oil has calculated that break-even point for drilling in Jamaica is US$25 per barrel, or a fraction of the current US$77 a barrel that oil is fetching on the world market. This bright outlook favours the company finding a drilling partner to cut down on the US$30-million estimated cost to drill.

The various Jamaican governments have rather impressively stayed with the oil exploration projects through the ups and downs, even when a fair number of large companies have come with great plans but soon after packed up their equipment and departed.

The enduring belief is that even with the wild fluctuation in oil prices on the world market, finding oil in Jamaica could mean replacing imports of up to US$2 billion a year with indigenous supplies in an energy-hungry nation.

Besides delivering long-term energy security, generating significant revenue, and creating economic opportunities for Jamaica, it would mean the ability to wipe out the foreign debt, which has been like a millstone around the country’s neck.

Dare we begin to hope again?

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