Honduras' government has signed a memorandum of understanding with British multinational BG Group covering oil and gas exploration in the northeastern jungle region of La Mosquitia, which borders Nicaragua.
Honduran Natural Resources and Environment Minister Rigoberto Cuellar and Carlos Quintana, vice president and legal representative of BG Group, signed the agreement at the presidential palace in Tegucigalpa.
Honduran President Porfirio Lobo, witness of honor at Tuesday's signing ceremony, described the accord as "historic."
Cuellar said no serious appraisal of Honduras' hydrocarbon potential has been made in 30 years and that "it's time for the Honduran people to dispel their doubts" over whether the country has oil or not and in what quantities.
He added that the strategic partnership with BG Group will guarantee the project has the necessary transparency and technical and financial capacity and ensure that social responsibility requirements are met, particularly in the environmental area.
The president's office said in a statement that BG Group has applied for an operations permit with the Natural Resources and Environment Ministry.
The government said some special benefits had been obtained in the MOU, noting that the company agreed to pay a royalty in the exploration phase and finance social development projects in communities in that region.
It did not specify the amount of the royalty nor how much BG Group would invest in that stage.
Cuellar said the MOU with BG Group only covers 15 percent of that potentially hydrocarbon-rich area.
In the late 1990s, Russian experts found evidence of petroleum in an area of Honduras stretching from the northern province of Atlantida to the northeastern region of La Mosquitia, but they did not indicate the quantity nor quality of those reserves. EFE