(S&P Global Platts, 28.Aug.2019) — Uruguay is optimistic that a recently launched open round for offshore acreage will tempt companies to bid, buoyed by a first round in neighboring Argentina this year that fetched nearly $1 billion in offers from some of the world’s biggest explorers, an Uruguayan official said Wednesday.
One company, with activities in the South Atlantic, already bid in the first deadline of the open round, which will be held twice yearly, in May and November, said Santiago Ferro, head of administration and contracts in exploration and production at ANCAP, the country’s state oil company.
“This is very encouraging,” he said of the potential interest in an interview at an American Association of Petroleum Geologists conference in Buenos Aires.
The company, whose name he declined to identify, citing confidentiality agreements, bid for two blocks in shallow waters, while a second company expressed interest but did not make an offer by the May 31 deadline, Ferro said.
He said the interest comes even after a third round last year, done through a more traditional periodic process, not open bidding, did not attract bids. That round had been for 17 blocks and came shortly after France’s Total, which had picked up acreage in an earlier round, drilled a dry well in deep waters.
Since then, however, Argentina held a round for 38 blocks, of which 18 were awarded to 13 companies including Equinor, Total, ExxonMobil and Shell.
Ferro said that this may have helped the open round in Uruguay, given that as offshore activity increases in the region it makes more services available, such as boats that collect seismic data. What is more, the three previous rounds and the collection of seismic studies over the past few years means that it is cheaper for companies to start in Uruguay, given that they do not have to acquire seismic data at the outset but can work with the existing information.
“They can save money to put it into drilling a well,” he added. “The cost of entry is lower.”
DRY WELL GIVES PAUSE
Even so, the country’s offshore region exists under the specter of a dry well.
“Obviously, a dry well makes companies [have] doubts about a play,” Ferro said.
However, he said there are “still a lot of plays yet to be tested in the basin,” including a Cretaceous formation, which is deeper than where Total drilled. Cretaceous is a formation that has been a source of finds around the Atlantic, in Africa and Guyana, Ferro added.
“The industry has started to understand that there still is potential in the offshore basin in Uruguay,” he said.
Indeed, the bidder for the two shallow-water blocks, whose name is to be made public over the next month, is thinking of drilling into a different play than Total did, likely in the Cretaceous, Ferro said.
“We understand that Cretaceous is the most prospective zone,” Ferro said.
TOTAL EYES ARGENTINA
When asked about the potential of exploring again in Uruguay, Total’s exploration manager for South America, Emmanuelle Garinet, told S&P Global Platts at the event that she could not discard the possibility.
“There are no plans to go back, but we never say never,” she said.
Since the dry well, Total has won blocks in Argentina’s offshore, building on a large gas development off the coast of Tierra del Fuego, the southernmost province in that country.
“We believe there is great potential there,” she said of Argentina’s offshore.
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