Challenger inks Uruguay offshore contract

London-listed upstream firm Challenger Energy has signed a contract with Uruguayan state oil company Ancap for the second of two offshore exploration blocks awarded.

Challenger has already inked an agreement for OFF-1.

The latest signing corresponds to OFF-3, an area of 13,252km2 in water depths ranging from 20-1,000m, around 100km off the coast.

In a statement, Challenger indicated that the company would look to follow a similar path to that taken for OFF-3, where a chunk was farmed out to US major Chevron, a deal pending regulatory approval.

“The company intends to follow a similar strategy to that successfully adopted for the Area OFF-1 license (the farm-out of which to Chevron was announced on 6th March 2024), specifically to accelerate its technical work programme including additional discretionary work, with the objective of high-grading existing prospects and identifying new plays and prospects, and ultimately with a view to introducing a strategic partner at an early stage,” Challenger said.  

Uruguay, which has no domestic hydrocarbons production industry, recently announced bids had now been placed for all seven blocks offered under the country’s open round, held twice a year.

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In December, Ancap signed contracts with APA for OFF-6, Shell for OFF-2 and OFF-7 and YPF for OFF-5, adding at the time that a contract for OFF-4 (APA-Shell) was also due to be inked. 

Offshore exploration in Uruguay gathered pace in 2016 with the drilling, by TotalEnergies, of the first well in around 40 years. Oil and gas shows have been reported, but no commercial discovery made.

GREEN HYDROGEN

In parallel, Uruguay is also working to build a green hydrocarbons industry, targeting both the export and domestic markets. 

In recent developments, the government signed an MOU with e-fuels firm HIF Global surrounding a roughly US$6bn plant planned for Paysandú department. The move constitutes a step prior to the signing of an investment contract, the office of the presidency said in a statement.

In other recent news, the energy and transport ministries signed an MOU with French consortium Setec to study the feasibility of introducing a hydrogen-powered passenger train. Being paid for via a grant from the French government, the 12-month study will involve exploring the technical and economic viability of the project.

Officials envisage running services along a 60km stretch of the Ferrocarril Central line, which is under construction.  

Setec comprises Setec Ferroviaire and Setec International.