(Oil Price) – Companies are gearing up for exploration drilling in deepwater blocks offshore Uruguay in the hope that the South Atlantic margin offshore South America could hold a lot of oil, similar to the recent discoveries offshore Namibia in Africa.
Uruguay, with a limited exploration drilling history of three wells spudded, all dry, has attracted the interest of many international companies that look to find the next billion-barrel oil province.
Companies including Shell, Chevron, Eni, APA, QatarEnergy, and Argentina’s YPF have acquired the rights to drill in all seven offshore blocks that Uruguay has contracted in recent years.
The hunt for the next big oil province will officially begin later this year or early in 2027 when APA Corp is expected to spud the first exploration well.
YPF of Argentina is expected to be next, with drilling to commence in late 2027 or early 2028. If YPF’s hopes of potential resources offshore Uruguay are confirmed, the new oil province could prove bigger than the Vaca Muerta shale in Argentina, YPF’s chief executive officer Horacio Marín said this week.
“This could be much bigger than Vaca Muerta, it could yield millions and millions of barrels of production,” Marín said of the OFF-5 block in which YPF has a stake, as carried by local media.
Hopes of millions and millions of barrels of crude have prompted Italy’s Eni to sign an agreement late last year for the acquisition from YPF of a 50% share and operatorship in the exploration Block OFF-5. The deal hinges on approval by the authorities in Uruguay.
“Block OFF-5 represents a highly prospective area that further strengthens Eni’s exploration portfolio that combines a large and robust set of near-field and infrastructure-led exploration prospects with diversified selected high impact opportunities,” the Italian major said in November.
Interest in Uruguay’s offshore blocks has exploded in recent years as geological links to Namibia’s offshore, due to the fact that Africa and South America were once a giant continent, have prospective explorers hopeful that Uruguay could be another Namibia oil province.
Earlier this year, Qatar’s state firm QatarEnergy bought participating interests in three exploration blocks – OFF-2, OFF-4, and OFF-7 – offshore Uruguay from BG International Limited, a subsidiary of Shell.
Separately, U.S. supermajor Chevron and QatarEnergy have farmed into multiple offshore blocks adjacent to Sintana Energy’s OFF-3 block. Sintana Energy earlier this month announced it had completed the first season of 3D seismic acquisition on the OFF-1 bloc and continues the process to farm out interests in the OFF-3 block.
“The ongoing and increasing level of investment and activity by major international oil companies in Uruguay is a strong endorsement of the prospectivity of the Company’s Uruguayan assets,” said Sintana Energy.
Interest in Uruguay’s offshore blocks is high as major operators vie for a piece of what could be the next big oil province.
Sure, first oil is years away. Companies are only at the initial seismic survey stage, with first drilling not expected for a few more months. The deepwater blocks and the lack of infrastructure could represent further hurdles to potential development.
But first of all, the operators of Uruguay’s seven offshore blocks need to begin exploratory drilling and actually prove the presence of hydrocarbons in the geological formations believed to be similar to Namibia’s.
Appetite for acreage has been strong this year as the majors are looking for the new high-impact targets to increase reserves. If drilling offshore Uruguay proves successful, a decade from now the country could become a new oil producer with open access to the Atlantic and the trade routes to Europe and Asia—without needing the Strait of Hormuz or other high-tension chokepoints to ship oil where it’s needed.
By Tsvetana Paraskova for Oilprice.com
