With a strong political will of both main national authorities and the national oil company ANCAP, the Uruguay Round II for the offshore oil exploration and exploitation was open in Montevideo, Uruguay. The ANCAP president Raul Sendic gave the welcome to all the companies that came to the event, as its presence show its trust on the commitment of the country and ANCAP in the oil exploration. Sendic highlighted the ANCAP works that was done from 2006 in a new exploration phase, by adding in continuous way new information that improves the knowledge of the offshore basins. In addition Sendic celebrated the promissory work of the oil exploration on the onshore, where the geochemical research is showing similarities with the shale gas basins in Neuquen, Argentina.

The National Director of Energy Dr. Ramon Mendez developed the national energy plan 2008-2030 that accounts with the support of all the political forces in Uruguay, and the national energy policy. Mendez closed its speech by signaling the importance of the information that supports the existence of an active oil system in the onshore, and its Devonian sequence that is supposed to be the same that is present on the offshore, what increase the hope to find oil in this area.

The opening accounted also with some words of the Uruguayan president Jose Mujica, who highlighted its gratitude with the collaboration of the oil companies to face the challenges of a small country as Uruguay. The president highlighted the political will of the national authorities to know what is in the Uruguayan offshore, as a must not only for the current generation but also for the future generations.

The ANCAP E&P manager Hector de Santa Ana highlighted its main aspects: the exploratory potential, the geology, the contract model, the bidding terms, and the business environment. De Santa Ana cited the objectives of the Uruguay Round II, in particular to promote that new oil companies operate in the offshore; a better synergy between the national oil company, the international oil companies and the services companies; to increase the value of the exploratory research, and the achievement of new exploratory contracts.

De Santa Ana remarked the progress made since the Uruguay Round I, particularly in the definition of new geological models and exploratory situations, new ANCAP exclusive seismic acquisition, definition of new blocks according to its prospectivity and exploratory relevance, and new bidding terms and contract model. The E&P manager underlined that some international companies are already working with the technical information, such as Apache (USA), BG (UK), Noble Energy (USA), RWE DEA (Germany), Tullow Oil (UK), and ENI (Italia). De Santa Ana closed his speech by highlighting the will of ANCAP to improve in a continuous way the technical information and the process features to minimize the risks of the projects and to increase its operational performance.

Santiago Ferro, Contract Officer of the ANCAP E&P Division was in charge of present the bidding terms. Thus, he informed that the contracts will be done under the format of Shared Production Agreement. Until March 1, 2012 the interested companies can submit to ANCAP the intention letter and documents for qualification of oil companies. On March 15, 2012 as a deadline ANCAP must inform to the companies if they are able to participate. The qualified companies must submit its proposals between March, 22 and March 29, and the proposals are open by ANCAP on March 29 at 15 p.m. ANCAP has September 25, 2012 as a deadline to define the winning proposals. Ferro also cited that the companies can submit proposal for 4 blocks as a maximum, the proposals are independent for each area, and the cost of the Round terms are US$ 5.000 worth. Ferro indicated the legal, financial, and technical requisites for participation (for ultradeep waters and for shallow waters), as well as the available information, including the prices of the recent ANCAP exclusive seismic data acquisition.

Ferro explained how will be done the evaluation of the proposals, according to the following weighted criteria: maximum percentage of association (between 20% and 40%), committed exploratory program, and the increase of Profit Oil for the Uruguayan State. He remarked that the winning company has to register a Uruguayan company, and in the case of a winning consortium should be formed by Uruguayan companies. The exploratory phase can have 9 years as a maximum, and there is no mandatory exploratory drilling. The second period of three years includes an exploratory drilling, as well as the third period of two year, that includes also a 30% relinquishment area. The exploration phase can has a maximum of 25 years, and the total period for exploration and exploitation has 30 years as a maximum, that can be extended in 10 years more.

The ANCAP Legal Services manager Dr. Leonardo Bianchi underlined the legal aspects of the bidding process. He highlighted that the contract between ANCAP and the private companies should be signed by the Executive Power. The winning company has the right to export its own oil resources, while ANCAP has the right to buy all the needed oil resource for its internal market. Bianchi also explained, inter alia, the contractual terms during the exploration and exploitation phase, how should be distributed the oil resources between the partners, how to evaluate those resources, the taxation system, the environmental legal framework, the options for association between ANCAP and the winning companies, and the mechanism for settlement of disputes.

Tags: ANCAP