MercoPress. South Atlantic News Agency

Oil exploration in Magallanes Region begins in six months

The international hydrocarbons corporations which last October were awarded oil exploration licences in the extreme south of Chile signed on Wednesday the operation contracts with the Chilean government during a ceremony headed by President Michelle Bachelet in Punta Arenas.

The operation involves 267 million US dollars to be disbursed in three to seven years and commits the corporations to begin pre exploratory activities before six months time which means a great boost for the Magallanes and Chilean Tierra del Fuego economies. The Special Petroleum Exploration Contracts, CEOP, which the Chilean government through the Ministry of Mining signs with a company or consortia of companies for the exploration, exploitation and profiting from oil and gas resources is contemplated in the Chilean constitution and is geared to have the private sector participate in increasing the country's energy resources. These contracts can be awarded in direct negotiations or in a bidding process as was the case in Magallanes region, which is where Chile's oil and gas industry started. At the Punta Arenas ceremony were present besides Ms Bachelet Mining Minister Santiago Gonzalez, Defence minister Jose Goñi, Deputy Mining Minister Veronica Barona; ENAP Chile's government owned oil corporation CEO Enrique Davila and officials from Magallanes and Tierra del Fuego. The companies signing contracts were Apache Corporation (Canada), Pan American Energy LLC (US), Greymouth Petroleum Holding Ltd. (New Zealand) and the IPR-Manas consortia (US and Switzerland). "These activities will have a great impact on the regional economy and will open new job opportunities and for local supply and service companies", said Davila. The activities include seismic surveying, drilling, transport, support services, infrastructure and environmental assessment. Contracts have two phases Exploration and Production; exploration has a seven year deadline in three stages (36, 24 and 24 months) and exploitation could extend 25 years, and begins the moment a drilled well is considered commercially viable. ENAP plays a leading role since it shares some of the licenced blocks considered with most potential.