From Canary Yellow To Black Gold

Sixty kilometres from the coasts of Lanzarote and Fuerteventura, the Spanish energy company Repsol is to start prospecting for oil. The arguments that have raged over oil exploration off the Balearics (further away than in the case of the Canaries) are being repeated but are creating more of a fuss and more by way of potentially bad publicity.

The arguments do, though, put into perspective the situation with regard to prospecting in the seas between the Balearics and the peninsula. While concerns for the environment and for tourism are as pronounced in the Canaries as in the Balearics, the potential economic benefits are being expressed far more strongly.

Repsol believes that there is a high probability of discovering oil (if you accept that a 20% probability is high) and that exploitation of these "probable" oil beds would eventually realise the equivalent of 10% of Spain's total oil and gas consumption for at least 20 years. (How such a calculation can be made based on a 20% probability I'm not entirely sure, but then I am neither a geologist nor an oil expert.)

Were such production of oil to come to pass, then there would be a clear economic benefit. And there is another strong economic case for Repsol's activities, that of employment. The Canaries, despite an all-year-round tourism industry and despite, like the Balearics, having enjoyed a record tourism summer in 2011, suffer the second highest level of unemployment in Spain - 31%. A light has gone on in the head of José Manuel Soria who has said that this unemployment demonstrates that tourism is not sufficient and that more industry is needed. Soria, if you need reminding, is the national minister for industry and energy and also for tourism. He also just so happens to be a former president of the Canaries.

You might think that industry and energy should not be combined with a portfolio for tourism as well, as they have competing demands. There will doubtless be many who disagree, but I believe that in Soria, especially as he knows full well from his Canaries experience what tourism means in terms of real employment prospects, here is a minister ideally placed to balance these competing demands. Tourism does not exist in an island all by itself; it is part of the total economy, and that economy would be partially transformed by oil.

There is a further economic factor that has influenced national government's authorisation of the Repsol prospecting. The oil beds lie not far from the imaginary line between Spanish and Moroccan waters; indeed they probably cut across this line. The Moroccans are in favour of exploration, and the fear has been that if Spain doesn't seek to exploit what oil there may be, then Morocco could nab it all for itself. There may yet, at some time in the future, be some almighty row over who owns the oil, but for now there is accord. This political dimension distinguishes the Balearics argument from that in the Canaries; there is no argument about who owns what may lie in the bay of Valencia and towards the Balearic Islands. But the politics make it more urgent that Spain (and Repsol) get a move on.

The politics within Spain are another matter. It is a curiosity that the Partido Popular in the Canaries, the Balearics and Valencia have all voiced their opposition to exploration; curious, as you might believe that the PP would be more disposed to display economic and business pragmatism than other parties. The PP in the Canaries are none too impressed by national government having gone over their heads, but someone has to, and the oil would be in the national interest (and also in the interests of the Canaries if their diabolical unemployment rate could be tackled).

The prominence being given to the prospecting is where the bad publicity comes in, and it is bad publicity fairly and squarely of a tourist style. TUI, for one, has expressed its concern, and the bad publicity has mainly surfaced in Germany, causing fears that the Canaries will acquire a different sort of reputation, i.e. for oil, and one that runs counter to a general culture in Germany of environmental concern and for clean energy.

Notwithstanding these admittedly legitimate fears, I would reiterate a point I have made previously in the context of prospecting off Balearic waters, and this is that oil and tourism can co-exist, as they do in the likes of Trinidad and Tobago. National government is right to press ahead, and for this we have to thank the existence of a minister who "gets it" where a combination of industry, energy and tourism is concerned.


Any comments to andrew@thealcudiaguide.com please.