Eric Watkins
Senior Correspondent
LOS ANGELES, May 5 -- Chile has signed contracts with four international oil companies for exploration of eight blocks in the southern Magallanes region.
Apache Corp., Pan American Energy LLC, Greymouth Petroleum Holding Ltd., and IPR-Manas collectively will invest some $222 million for seismic surveys and exploratory drilling over a 3-7 year period. Work is due to begin within 6 months.
IPR-Manas won the Tranquilo Block and will invest $33.2 million. Apache won the Russfin and Lenga blocks, where it will invest $23.4 million and $24.9 million respectively.
Greymouth won the Porvenir, Brotula, Isla Magdalena, and Caupolican blocks and will invest a total of $107 million, while Pan American Energy won the Coiron Block, where it will invest $34 million. Brotula and Isla Magdalena are offshore, while Otway is onshore and offshore. The remaining blocks are onshore.
Chile's state-run oil company Empresa Nacional del Petroleos (Enap) holds a 50% stake in the Coiron, Caupolican, and Lenga blocks, with the remaining 50% in each block held respectively by Pan American Energy, Greymouth, and Apache. The other blocks will be 100%-held by the winning companies.
For reasons that remain unclear, Total SA, which last October won the Otway Block where it was expected to invest some $44.5 million, did not attend the contract-signing ceremony.
Chile's Mining Minister Santiago Gonzalez said the government was surprised at Total's absence and that negotiations would start with the next company on the list—a consortium comprised of Wintershall, GeoPark Holdings Ltd., and Methanex Corp.
Analyst BMI said it is still possible that a deal might be worked out with Total SA before the contact is awarded to another company.
Meanwhile, Enap has been stepping up its efforts to develop gas reserves in the Lago Mercedes and the Dorado-Riquelme Block, while GeoPark is increasing gas production from the Fell Block.
In April, GeoPark said it discovered gas on the Fell Block, and that it was already selling gas from the deposit to Vancouver, BC-based Methanex Corp.
According to BMI, Chile hopes to increase domestic gas production from the Magallanes region to meet all demand in the far south of the country, while LNG imports will meet demand growth in the central and northern regions.
Contact Eric Watkins at [email protected].
