Roundup: Offshore exploration, oil pipeline, LNG project, block auction and more

Offshore

A Uruguayan offshore hydrocarbon block farmout deal moved a step closer to being finalized as engineers eye early 2025 for the launch of exploration-phase work.

State hydrocarbons company and sector regulator Ancap greenlit the transaction, under which US major Chevron will acquire, from British firm Challenger Energy, a 60% participating interest in area OFF-1 and assume an operator role.

Seismic and drilling work is planned for the acreage, covering 14,557km2 in water depths of 80-1,000m

The farmout now enters its final approval phase, involving processes at the ministries of energy and economy. It should be completed within eight weeks, Challenger said in a regulatory filing.

“This in turn will enable Chevron, as incoming operator of the block, to move forward with 3D seismic acquisition on an accelerated basis, targeting commencement in early 2025.”

All of Uruguay’s seven offshore exploration blocks have active contracts.

Oil and gas shows offshore Uruguay have been reported in previous exploration phases, but no commercial discovery has been made.

Uruguay and Argentina, as well as a company targeting acreage offshore Falkland Islands, have said discoveries offshore West Africa were made in geological formations similar to those off the coast of South America. 

Argentina’s first exploration well drilled in ultradeep waters, Argerich-1, was declared dry.

Pipeline progress

A pipeline project vital to debottlenecking oil dispatch from Vaca Muerta is due to enter service in the first few months of 2025, concessionaire Oldelval said.

The US$1.2 billion initiative – known as Duplicar – involves duct and pumping station work to increase transport capacity between the unconventional hydrocarbon formation and Puerto Rosales in Buenos Aires province to 86,000m3/d (541,000b/d) from 36,000m3/d currently.

State-controlled oil company YPF is carrying out a separate project in parallel, Vaca Muerta Sur, to transport Vaca Muerta oil to a planned export terminal in Río Negro province. Around 180,000b/d of capacity is due to come online in 2H26, a transport rate that could climb to 700,000b/d from 2028 if sufficient demand is in place.

The bulk of upstream investment in Argentina is being pumped into Vaca Muerta, with the export market fixed squarely in the crosshairs of producers. Vaca Muerta output was 61,400m3/d in July, up 32.7% year-on-year, according to data from the General Mosconi institute energy think tank.

LNG project

YPF said a planned LNG project would proceed even if partner Petronas were to drop out.

The firms, for several years, have been planning an LNG exporting initiative.

In comments reported in local press, YPF CEO Horacio Marín said the project was in the engineering phase and that other companies could potentially get involved.

“As things stand, Petronas has the option of continuing or not with the project,” Marín was quoted as saying. “There’s no need to dramatize the situation, they are business decisions.”

Petronas is reportedly concerned about Argentina’s macroeconomic situation and political factors behind a decision to build the project in Río Negro province rather than Buenos Aires.

Based on past YPF comments, production capacity of 1-2Mt/y is expected to start from 2027 using floating LNG infrastructure, before ramping up to over 17Mt/y by 2032 following construction of a fixed plant onshore.

YPF has previously said third parties – local gas producers – were being courted to help power the project ahead.

Elsewhere on the LNG map, Argentine upstream firm Pan American Energy (PAE) and logistics player Golar LNG said in July that they planned to start exporting LNG in 2027.

Under the agreement, vessel Hilli Episeyo, with LNG production capacity of 2.4Mt/y, the equivalent of 11.5Mm3/d (million cubic meters per day) natural gas, would be used. PAE would supply the gas. 

Argentina currently exports gas by pipeline, with nearly all dispatched to Chile.

The country’s gas production was 152Mm3/d in July, up 9.9% year-on-year, according to data from the General Mosconi institute.

Río Negro auction

Another private upstream initiative in Argentina’s Río Negro province is advancing.

Capex presented a project to explore for hydrocarbons – and eventually extract them – at Cinco Saltos Norte, an area that has previously been put on the auction block without success.

Initial proposed outlay is US$5.67 million, according to a decree which declared the project of public interest and authorized an associated auction to get underway. Work includes reprocessing 200km2 of 3D seismic. 

One of Argentina’s smaller hydrocarbons firms, Capex was granted preferential rights to improve its eventual bid, if necessary, and in turn secure the 141km2 acreage.  

The project would fall under a government strategy to spur nonconventional hydrocarbons exploration work. Río Negro sits over a sliver of Vaca Muerta.

A separate auction process is underway after fellow producer Pilgrim Energy presented a private initiative project to explore for gas at areas Jagüel de los Milicos (21.6km2) and Angostura (396km2).

Offshore gas 

TotalEnergies said production had started at the Fénix gas field, offshore Tierra del Fuego province, Argentina. 

Involving investment of around US$700mn, Fénix is part of the Cuenca Marina Austral 1 (CMA-1) concession, in which TotalEnergies holds a 37.5% operating interest, alongside its partners Harbour Energy (37.5%) and PAE (25%).

Production capacity at the field’s unmanned platform is 10Mm3/d. 

Gas production in Argentina was 152Mm3/d in July, up 9.9% year-on-year, according to General Mosconi data.

Name change

London-listed mining and hydrocarbons firm Echo Energy changed its name to Nativo Resources.

In the oil and gas arena, Echo has a 5% working interest in five production concessions in Argentina's Austral basin operated by Interoil Exploration and Production ASA and due to expire in 2026: Chorrillos, Campo Bremen, Oceano, Moy Aike and Palermo Aike. Interoil is in the process of applying for a 10-year extension, according to information from Nativo.

Last year Nativo reduced its Argentine oil and gas footprint.

In a regulatory filing, Nativo said its strategic focus was now on precious metals mining in Peru. In July Echo entered into a 50:50 JV in Peru, Boku Resources, which holds 100% of the Tesoro Gold concession where small-scale extraction work is being carried out.