CGC pins Auca bid on hydrocarbons law

Argentine oil company Compania General de Combustibles (CGC) will wait until Ecuador's new hydrocarbons law is in place before deciding whether to bid on a contract to boost oil production on state oil company Petroecuador's Auca block, a company spokesperson told BNamericas. The contract is part of a tender for 20-year concessions on four Petroecuador blocks: Culebra-Yulebra, Lago Agrio, Shushufindi and Auca. Combined reserves are some 904.5 million barrels, including the recently added Puma field on the Auca block. The ministry has announced three incentives to make the tender more attractive, including reducing the rate companies pay to transport crude on the Sote pipeline and allowing companies to re-inject gas produced on the fields to produce more crude or generate electricity. Bids are due January 23, but local newspapers reported that no companies have shown interest in buying bid rules since they were made available during the first week of November. "As there is no response for the bids the government is planning to extend the time to receive the bids. I heard that they are planning to extend the time four months," the spokesperson said. Some companies, including Canada's Encana, were discouraged by the terms of the tender, which require the winning bidder to pay 35% royalties for incremental production on top of the 12.5% charged normally. Meanwhile, CGC plans to resume seismic work on Ecuador's block 23 in January, despite safety concerns arising from ongoing conflicts with local indigenous communities, the spokesperson said. "The government has notified the [indigenous] communities that we will perform our activities in January 2004, but there is still resistance," the spokesperon said. The company expects Ecuador's government to provide safety guarantees to enable seismic work to resume. "We are preparing an strategy with the army in order to protect our activities," the spokesperson said.