23/6/2022
In the framework of the Open Uruguay Round in force since 2019 and in the first Instance 2022, ANCAP's board of directors awarded three of the six blocks available in the continental shelf. ANCAP released details last Thursday at a press conference.
ANCAP’s president, Alejandro Stipanicic, led a press conference along with general manager Ignacio Horvath, E&P manager, Héctor de Santa Ana, head of E&P Administration and Contracts, Santiago Ferro, and offshore Hydrogen project coordinator, Jorge Ferreiro. Stipanicic pointed out that the award is of great importance because it is the return to the country of first line companies after 10 years without receiving proposals of this type.
The bids received were driven by discoveries in the west coast of Africa, in basins with similar geological characteristics to those of Uruguay, and based on the prestige and reputation of the country in terms of its democratic, economic and legal stability, as well as its demonstrated respect for the commitments assumed. It also means an important support to the promotion of green hydrogen production for export, with the arrival of companies that develop strong investments worldwide, both in oil and gas and in renewable energies.
It was informed that Shell (through its subsidiary BG International Ltd.) submitted bids for blocks OFF-2 and OFF-7, while the well-known company Apache Corporation (now restructured as APA Corporation) submitted bids for blocks OFF-2 and OFF-6.
After the analysis of the proposals, the winning bids for the May 2022 period are as follows:
1) Block OFF-2: Shell, with a higher score than the one of APA Group, with an exploratory program that commits the evaluation of petroleum geology and prospective resources, gravimetric and magnetometric 3D inversion and modelling and data licensing.
2) Block OFF-6: APA Corporation, which commits to the drilling of an exploratory well in the initial four-year period, the evaluation of petroleum geology and prospective resources and the licensing of information.
3) Block OFF-7: Shell, with an exploratory program that commits to the evaluation of petroleum geology and prospective resources, gravimetric and magnetometric 3D inversion and modelling and information licensing.
The proposals involve the use of the wide existing seismic database generated in previous rounds and which analysis and interpretation were sufficient for the identification of attractive prospects that lead to the decision to drill an exploratory well in the Uruguayan sea, that will be added to Lobo, Gaviotín and Raya X-1 wells. The contracting of multiple services from specialized international companies to achieve the proposed commitments is estimated to be close to USD 200 million and is assumed at the full risk of the bidding companies.
ANCAP must submit these results to the Executive Branch for its consideration in order to proceed with the signing of the contracts with the companies, to start the investments related to the proposed activities.
These three blocks add to the contract signed on May 25th with Challenger Energy for the exploration in Block OFF-1, after the approval of the Executive Branch. This contract was proposed by ANCAP based on the offer made by the company in the Instance of May 2020 and includes the geological evaluation and modeling and the evaluation of prospective resources of the area, as well as the licensing and reprocessing of existing 2D seismic data.
All hydrocarbon exploration and eventual exploitation operations are subject to current environmental regulations that require specific prior and operational environmental authorizations. The terms and conditions of the bidding round require the adoption of the industry's best practices and technologies, aligned with the objective of performing sustainable activities. Uruguay has developed specific regulations and guidelines for these activities, with demanding requirements for seismic activities and offshore exploratory wells through the Ministry of Environment as the only competent agency in the matter.
LOCATION OF ENERGY PROJECTS IN THE URUGUAYAN SEA
