INTERVIEW-Cash-strapped Seychelles has high hopes for oil
09 Jan 2009 16:36:31 GMT Source: Reuters
By Richard Lough VICTORIA, Jan 9 (Reuters) - Oil could become a leading source of income for the heavily indebted Seychelles if recent seismic surveys suggesting large hydrocarbon reserves are correct, the Indian Ocean nation's president said on Friday. The tropical archipelago signed a production agreement in November with East African Exploration (EAX) for a largely overlooked area of seabed that the Dubai-based company thinks could hold billions of barrels of oil. EAX did a two-year study of 43,000 square kms (17,000 miles) that involved shooting 3,650 kms of new seismic data. "There appears to be a huge reserve within the offshore sector of the Seychelles plateau. Billions of barrels, according to the seismic surveys that have been done," President James Michel told Reuters in a interview. "With the estimated quantities of oil ... it would be the major source of revenue, apart perhaps from tourism." Michel called on creditors to cancel half the Seychelles' $800 million foreign debt to help a slowing economy on the sharp edge of the global crisis. [ID:nL9433922] Best known as a luxury destination for holidaymakers, the country of just 85,000 people saw a sharp fall in growth last year and foreign reserves neared exhaustion. The International Monetary Fund says it expects the economy to contract by 0.5 percent this year as European tourism is hit by the global financial downturn. The Seychelles is considered one of Africa's most prosperous and stable countries, and Michel said its people would not squander such a lucrative natural resource. "There are other African countries where a lot of mistakes have been made," he said. "All our negotiations with the companies that will explore and drill are done correctly so the Seychelles will get the right benefit and what is really due in terms of our natural resource." Africa has become a new frontier for oil explorers as instability in the Middle East, fears of energy nationalism in South America and Russia and high demand from Asian economies drive prospectors off the beaten track in search of reserves. EAX, a subsidiary of Black Marlin Energy Ltd, is seeking partners and plans to acquire at least another 2,000 kms of seismic data over the next two years. Given the Seychelles' reputation as a palm-fringed tourism paradise, Michel said his government had an obligation to future generations not to compromise the ecosystem for petrodollars. "Whatever exploration is done, whatever drilling is done, whatever exploitation is done, it will be done in a way that protects the environment," he said. "Our environmental policy must remain. It is capital to the sustainability of our economy. The Seychelles would not refine any oil itself, he said, because the refining process remained a "dirty business" using today's technology: "We have to derive the maximum benefit but keep the Seychelles environment clean."
