Spanish energy company Repsol SA said on Friday that it was abandoning oil and gas exploration off the Canary Islands after an initial survey yielded insufficient results to merit extraction.
The project, which started in November last year, had faced stiff opposition from local politicians and environmental groups. It also coincided with a plunge in oil prices that has put into question the viability of planned exploration projects around the world.
Repsol is the lead operator of a consortium that earmarked US$350 million for an exploration phase that was expected to last four months. It had teamed up with Woodside Petroleum Ltd of Australia and RWE AG of Germany.
The deep-water survey was about 40 miles from Lanzarote and Fuerteventura, part of the Canary Islands off the west coast of Africa. The archipelago, which belongs to Spain, is also a major destination for tourists.
The project’s oil exploration vessel, the Rowan Renaissance, will return to Angola, where Repsol has another venture.
Repsol had forecast long-term yields of 110,000 barrels of oil per day from the project, enough to cover about one-tenth of Spain’s oil consumption. The company initially put the chances of finding oil for exploration there at between 15 percent and 20 percent.
The survey “confirmed that oil and gas have been generated in the basin,” Repsol said in a statement, but “the deposits found have been saturated with water, and the hydrocarbons present are in very thin, non-exploitable layers.”
Kristian Rix, a spokesman for Repsol, said the decision to withdraw from the project had not been influenced by the recent drop in oil prices. “Angola is an interesting project for us, and it seems more promising at this stage,” Rix said. “It’s a question of where you best allocate your capital.”
Pedro San Gines, the head of the local authority of Lanzarote, welcomed the decision and called for Spanish authorities to promote renewable energy projects around the Canary Islands.
A major oil and gas discovery near the islands could have reduced Spain’s reliance on energy imports, as it imports more than 99 percent of its hydrocarbons.
However, the project faced fierce opposition from environmental groups. They argued that the project would endanger local flora and wildlife, including dolphins, not only because of the risk of an oil spill, but also because of tremors linked to exploration.
The project also turned into a political dispute between the Spanish government in Madrid and the regional government of the islands, which tried unsuccessfully to hold a referendum on the issue last year.
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