British oil and gas company BG Group will soon begin oil and gas exploration on Honduras’s Atlantic coast with an initial investment of at least $20 million, a company executive said on Thursday.
Honduran authorities plan to give the company an environmental license on Friday for an offshore block of 35,000 square kilometers off the coast of La Mosquitia, a jungle region bordering Nicaragua, Roberto Herrera, an adviser to the president, told Reuters.
“If they give us the environmental license tomorrow, next week we will begin exploration work,” Carlos Quintana, a BG Group executive, said in a press conference in Tegucigalpa.
The company will search for oil and gas deposits for four years in the block, investing $20 million to cover the first phase from 2014 to 2015.
Honduras handed the company a contract in May 2013 awarding exploration rights for four years, with an option to renew for two more. The contract also included drilling rights for 20 years, with an option to renew for five more.
The exploration contract was the first given out by the Central American nation, which has never discovered oil in marketable quantities.
Neither government officials nor BG group have estimates for oil and gas reserves in the block.
If BG Group finds marketable quantities of oil, Honduras will receive 15 percent of the oil and gas extracted while the firm is recovering its initial investment, according to Herrera, who participated in negotiations.
Once initial investments have been recovered, BG Group would hand over half to 58 percent of output to the government, he added.