MercoPress. South Atlantic News Agency

Malvinas basin oil exploration scheduled to begin first half of 2011

The Tierra del Fuego offshore project includes Petrobras and Pan American Energy

Repsol-YPF plans to start deepwater exploration off the coast of Tierra del Fuego in the Malvinas basin are expected to begin before the end of the first half of 2011, according to company’s sources.

The company also said that no UK flagged vessels would be involved in the extreme south Argentina operations.

The announcement follows claims by a former Argentine member of Congress, Mario Cafiero who named the alleged vessels involved, UK flagged, and their current locations, which was picked up by Clarin. The two vessels named are ‘Stena Drillmax” and ‘Normand Baltic’

MercoPress also published the news but described it as a major public relations setback.

Repsol-YPF is planning to invest an initial 100 million US dollars in exploring the region which is 300 km east of Tierra del Fuego.

“The project will start this year, probably in the first half” the source said. “There is no date yet for the start, but things are moving ahead has planned.”

The exploration region is known as the Malvinas Basin and is on the edge of Argentina's maritime border with the Falkland Islands.

Drilling will be in water depths of more than 500 meters with wells drilled to depths of 2,000 meters.

YPF is leading the project with financial backing from its partners -- Brazil's Petrobras and Argentina's Pan American Energy, which is backed by China's CNOOC. YPF and Pan American each have a 33.5% share in the consortium that has rights to the block. Petrobras has the remaining stake.

YPF is already exploring on its own and with Chile's ENAP Sipetrol Argentina and Argentina’s state-owned Enarsa other areas off shore and has said it could explore off the coast of Buenos Aires province further to the north.

Enarsa holds rights to most of Argentina's offshore acreage, much of which is unexplored.

Planning Minister Julio De Vido, the chief energy strategist last January said Enarsa is preparing an offshore licensing round, likely to take place later in 2011.

Argentina, which has been producing oil since 1907, needs new discoveries to turn around a decline in oil and natural gas production and reserves as onshore fields mature.

This is forcing it to turn to international markets to make up for domestic energy shortfalls, particularly for gas and diesel. Imports are expected to continue rising until unconventional gas reserves, estimated at up to 257 Tcf in the western basin of Neuquen, come into production.