Costa Rica's Constitutional Court Gives Mallon Oil "Temporary" Green Light For oil Exploration

The Constitutional Court suspended for the three years the moratorium decree for the exploitation of hydrocarbons in Costa Rica, issued last December by Presidenta Laura Chinchilla.

The decision allows Mallon Oil to start oil exploration in the Huetar Norte and Caribbean, and demand that the government sign the exploration contract.

The international oil company argues that it has an agreement with the government since 2000.

The Mallon Oil Company had been pressuring Laura Chinchilla’s government to allow for oil and natural gas exploration within Costa Rica, last September presenting two appeals to Costa Rica's Constitutional Court.

In 2000, Mallon Oil Company was awarded a 20-year concession for exploration and production of oil and natural gas in northern Costa Rica.

The agreement would have allows Mallon Oil to extract five to 25 million oil barrels annually, enough to supply the local demand, which is currently estimated at 19 million barrels per year. The revenue from the oil is estimated to be at least $7 billion for the entire length of the concession.

In August 2011, Presidenta Laura Chinchilla’s government, through the Environment, Energy and Telecommunications Ministry, issued a three-year moratorium on oil and gas exploration and exploitation. The same environment minister who issued the moratorium, René Castro, had awarded the permit to Mallon, a subsidiary of Black Hills Corporation in 2000.