Uruguay, take two

March 2, 2011

Ahead of the September launch of its second offshore licensing round, Uruguayan national oil company Ancap opened up a Houston data room in February in hopes of whetting IOC appetites. Jennifer Pallanich paid it an early visit.

Uruguay Round II has fair bidding terms according to Santiago Ferro, Ancap's E&P administration and contracts manager. ‘We want the only risk the oil companies have [to be] geological,' he said.

The country is relatively under-explored, particularly in offshore terms. A few years back, its first offshore licensing round resulted in the award of operatorships for just two of the 11 blocks on offer – blocks 3 and 4 – to a consortium of Petrobras, YPF and Galp. Ancap nonetheless considered the round a success, citing as extenuating circumstances the ‘tough financial and commodity pricing environment' prevailing at the time and ‘the high-risk nature of the acreage offered'.

According to Ancap, the outcome of Round I vindicated its earlier decision – ‘in response to that difficult business environment' – to revise the original bidding round terms. The main change was the removal of a compulsory drilling requirement during the first exploration phase in the most prospective blocks.

For Round II, as with the 2009 round, ‘there won't be any mandatory drilling required in the first exploration period', Ferro confirmed. He added: ‘Ancap intends to fully launch Uruguay Round II in September. At that point, the definitive round terms and contract model will be available. For the next bidding round, we're going to change the shape of the blocks . . . and perhaps we'll be adding in the shallow waters and the ultra-deep waters.'

A dozen offshore blocks are expected to be up for bid this time. The Houston road show will follow in October. Applications for qualification will be invited between September and February 2012, with companies expected to submit their bids during March and April 2012. Bid opening is scheduled for April 2012.

To encourage bidders, Ancap is making available not just its ‘vintage' 2D seismic data from the 1970s through 1982 – which Ancap may reprocess – but also more recent 2D data, including 1840km of 2D from a CGG campaign in 2002, 7125km of 2D from a Wavefield Inseis campaign in 2007 and an additional 2909km from the company's 2008 campaign.

Processed or field data from a new multiclient 2D campaign, covering 550km and to be carried out around shortly, is expected to be available for the bidding round. Additionally, Fugro Gravity & Magnetic Services expects to carry out a nonexclusive aeromagnetic data and magnetic interpretation package on Uruguay's Punta Del Este and Pelotas offshore basins. ‘With all the new information, we also are discussing to have satellite images for the identification of oil seeps,' Ferro said.

Ancap geologist Bruno Conti Paciello believes Uruguay's basins may be analogous to the Santos and Campos basins offshore northern neighbor Brazil. ‘We didn't find carbonates in our basins,' he said. ‘We are to the south so we don't think we have carbonate sequences.'

While the terms of Round II have yet to be finalized, Ferro said, the PSA structure requires neither royalty payments, nor signature and/ or production bonuses. ‘The good thing is we don't have any royalties. We don't have any bonuses. No surface rentals,' he said. Under Uruguay's Hydrocarbon Law, operators are exempted from tax on net worth, consumption taxes and custom taxes. It is possible, Ferro added, that operators may be exempted from income tax, although they would still be held accountable for social security contributions.

‘The energy strategy is agreed by all the political parties, which is a good thing,' he said. OE



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