Uruguay’s hydrocarbons refining company Ancap signed on Tuesday an agreement with US company Schuepbach Energy to begin exploration for oil and gas in the north and centre of the country.
Ancap president Raul Sendic described the agreement as ‘historic’, since “it is the first time Uruguay signs an on-shore exploration and production contract with a foreign company that could extend the relation for 30 years”.
Sendic said that if oil or gas is found in commercial volumes Ancap can then decide the creation of a joint company for the exploitation of the deposits with a 50% share of the enterprise.
Exploration will take place to the north of the country in an area covering 10.000 square kilometres in the provinces of Tacuarembo, Paysandu and Durazno with another option further north in Salto with 3.000 sq kilometres.
Martin Schuepbach, CEO of the Dallas based company said that the exploration project takes off based on some seismic surveying that were “most encouraging” with great expectations of success in the zone.
According to the contract the company will bring to Uruguay a state of the art but very costly equipment for seismic surveying with an investment in the range of 6 to 8 million dollars in the two year period. The exploration phase is expected to last eight years.
Sendic also revealed that Ancap would be signing in coming days a similar contract with the Argentine-Spanish oil company YPF to develop similar surveying in Paysandu.
Uruguay is entirely dependent on imported fuel for its daily consumption of approximately 50.000 barrels which are refined by Ancap which has a national monopoly.
This latest contract is in addition to the off-shore exploration or ‘Uruguay round’ in the country’s Atlantic maritime platform which has been extensively surveyed by two vessels, said Juan Gomez another member of the Ancap board.
Under the ‘Uruguay round’ Petrobras from Brazil, YPF from Argentina and PetroGalp from Portugal were awarded the initial search in offshore blocks.
Interestingly enough the Schuepbach Energy website says the company was granted “an exclusive hydrocarbon prospecting contract by the government of Uruguay” in the country’s central north region with was signed 21 October 2009.
“The breakthrough agreement, signed October 21, commits Schuepbach to a one year program that will include sample analysis of Devonian shale and feasibility studies to gravity analysis over the approved 10.000 sq km area (2.4 million acres). If the results are positive Schuepbach will have the exclusive rights to an exploration-exploitation licence over the contract area.
“Uruguay’s government owned oil and gas corporation ANCAP granted the onshore hydrocarbon prospecting contract, the first of its kind, during an increasingly important time for the energy short country to diversify its domestic sources of energy. Schuepbah and the company’s partner are seeking to replicate the successes of Texas Barnett Shale abroad utilizing the leading edge hydraulic fracturing and horizontal drilling technologies employed in their existing operations”.
“Schuepbach is currently active in New York State Marcellus Shale, Fribourg, Switzerland and has applied for various other international concessions. Operations of the company’s work program in north central Uruguay are expected to commence immediately.”