MercoPress. South Atlantic News Agency

UK and French companies awarded eight blocks in Uruguay’s offshore oil round

Ancap president Raul Sendic most satisfied with the results of the bidding process

UK’s BP, BG Group, London-based Tullow Oil and French oil major Total were awarded a total of eight offshore blocks in an Uruguayan bidding round and will invest 1.56 billion dollars in exploration of those areas, state energy company Ancap announced.

BP and BG Group each were awarded three blocks each, while Tullow and Total each received one block in the Uruguay Round II auction, in which 15 blocks were on offer covering an area of roughly 101,000 sq. kilometres.

The four companies’ bids, which Ancap President Raul Sendic termed of “extremely high quality,” beat out 19 other offers.

Nine groups submitted 19 bids for the eight available blocks. Shell, Exxon Mobil, and consortiums led by Spain's Cepsa and Murphy as well as Argentina's YPF were unsuccessful.

The discovery of large oil reserves off Brazil prompted Uruguay to look for reserves of its own. The country hopes to reduce its reliance on foreign imports. Ancap imports about 900,000 barrels of crude every 25 days from Brazil, Ecuador, Nigeria, Russia, South Africa and Venezuela.

Most of the eight blocks awarded are neighbouring with Brazil’s southern-most Pelotas basin.

The companies are to invest 1.56 billion dollars over the next three years to explore for oil and natural gas deposits in the blocks, which cover a maritime area spanning nearly 50.000 sq. kilometres.

The contracts give Ancap the right of first refusal over the production of any oil or gas reserves that may be discovered.

The company also could partner with the winning bidders in a potential production phase, taking stakes ranging from between 22% and 35% in the different blocks.

If energy resources were to be tapped in those areas, the Uruguayan government would obtain approximately 60% of the profits, Ancap executive German Riet told reporters.

Uruguay’s industry, energy and mining minister, Roberto Kreimerman, said this exploration process implies “an extraordinary level of investment” for the country that was unheard of two years ago.

Kreimerman estimated total investment in the energy sector will amount to 6.5 billion dollars through 2015, adding that “the clear success of the Uruguay II auction was due to Ancap seriousness and positive image” plus the country’s transparency, rule of the law and stable legal rules.

The Uruguay Round II was launched in September 2011 after studies carried out by Ancap indicated the possible presence of offshore hydrocarbon reserves.