MercoPress. South Atlantic News Agency

Petrobras signs contract to explore for gas in Santa Cruz

The Patagonian province of Santa Cruz and Petrobras signed an agreement for the exploration of two gas basins in the extreme south of Argentina, plus the possibility of further concessions to another foreign company.

The agreement established an investment of 400 million US dollars in the next seven years and the concession of two further deposits to Panamerican Energy. Basically it means expanding the current concession in Cerro Dragon, north of Santa Cruz, identified as Koluel Kaike and Piedra Clavada, which Panamerican Energy was awarded from 1992 to 2017. Since January 2007, oil areas under the Argentine Hydrocarbons bill belong to the provinces and therefore Panamerican Energy requested the provincial government a ten year extension of the license. Argentina?s Hydrocarbons bill states that oil contracts can be extended for ten years "and in this precise case the company is requesting an extension until 2027", said Alessandro Perrone, Santa Cruz Energy Secretary. According to Perrone Panamerican Energy has also offered to increase royalties an additional 3%. The bill establishes 12% of total production and oil and gas traded must go to provincial coffers. Panamerican Energy is also interested in off shore exploration in the San Jorge gulf, an area Santa Cruz shares with Chubut province. Last May Chubut agreed with Panamerican Energy to explore in the area to its own ?total risk? and if oil or gas is found, the company must associate with the provincial government. Santa Cruz is looking forward to reach a similar agreement with the company. Apparently the issue will be considered by Santa Cruz province governor Daniel Peralta during his visit to meet with Argentine president Nestor Kirchner in Buenos Aires. Panamerican Energy proposal was made official last September.