More acreage for Shell and APA Corporation off Uruguay

Uruguay’s state-owned oil and gas company ANCAP has awarded three offshore blocks under its 2022 Open Bidding Round to two companies, enabling the UK-headquartered Shell and the U.S.-based APA Corporation to expand their footprint off Uruguay.

ANCAP revealed the award of three out of the six available blocks off Uruguay last week, in a press conference, which was led by the CEO of ANCAP, Alejandro Stipanicic, together with the general manager Ignacio Horvath, the manager of Exploration and Production, Héctor de Santa Ana, the head of Administration and Exploration and Production Contracts, Santiago Ferro, and the coordinator of the Offshore Hydrogen project, Jorge Ferreiro.

Alejandro Stipanicic, ANCAP CEO; Source: ANCAP

Shell, through its subsidiary BG International, submitted bids for blocks OFF-2 and OFF-7, while Apache Corporation – now called APA Corporation – submitted bids for blocks OFF-2 and OFF-6. After their proposals were analysed, ANCAP opted to award Block OFF-2 and Block OFF-7 to Shell and Block OFF-6 to APA Corporation, which is expected to “undertake the drilling of an exploration well in the initial period of four years.”

According to ANCAP, the proposals involve the use of the “extensive existing seismic data,” which was used for the identification of attractive prospects that led to the decision to drill an exploratory well in off Uruguay which will be added to the Lobo, Gaviotín and Raya X-1 wells. 

Moreover, the cost of exploration activities, including hiring multiple services from specialised international companies to meet the proposed commitments is estimated to be close to $200 million and “must be assumed at the entire risk of the proposing companies.”

Source: ANCAP
Source: ANCAP

The offers received were driven by “discoveries in geologies similar to those of the Uruguay basins, on the west coast of Africa,” and represent support for the promotion of green hydrogen production for export, as portfolios of both companies, which were awarded these blocks, contain assets not only in oil and gas but also in renewables.

It is worth noting that Uruguay’s state-owned company is actively pursuing green hydrogen production powered by offshore wind through its H2U Offshore programme, which the firm presented in October 2021, together with the country’s ministries of industry and environment.

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ANCAP expects to launch a competitive tender, following consultations with companies, which could take between eight months and two years.