On Thursday, Uruguay’s energy landscape announced it is set to undergo a significant change as the country’s state-owned energy company ANCAP (National Administration of Fuels, Alcohols and Portland) signed contracts for four offshore blocks with prominent oil and gas companies. This collaboration aligns with the Open Uruguay Round framework, which has been in effect since 2019.
Uruguay to see offshore hydrocarbon exploration with ANCAP
In a press statement, Alejandro Stipanicic, President of ANCAP, emphasised that it is the first time all offshore areas will have active contracts. The imminent signing of the OFF-3 area contract with Challenger Energy is anticipated in the coming weeks, pending approval by the executive branch of the ANCAP.
The renewed interest in offshore exploration within the oil industry in Uruguay stems from recent discoveries in Namibia. However, ANCAP attributes this success not only to geological potential but also to Uruguay’s democratic governance and economic stability.
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Notably, the participating energy companies – Shell (SHEL), APA Corporation (0HGC) and Argentina’s National Oil Company – are not solely focused on traditional fossil fuels. Stipanicic noted that the country is focusing substantial investments in renewables, advanced biofuels, green hydrogen production, and carbon capture and storage.
ANCAP also highlighted that the contracts impose restrictions on the venting or flaring of natural gas, aiming to ensure that the carbon intensity of barrels produced in Uruguay remains one of the lowest globally.
The exploration and production contracts, modelled as production sharing agreements (PSA), are valid for 30 years, encompassing exploration and eventual production. The minimum work programs outlined by the license holders involve significant commitments and costs, including 3D seismic acquisition and reprocessing. ANCAP anticipates a seismic survey as early as late 2024 or early 2025, marking a crucial step in the offshore exploration sector’s advancement.
