ARGENTINA TO INVITE E&D BIDS ON 1.37 MILLION SQ KM

At the opening of the 13th World Petroleum Congress Argentine President Carlos Saul Menem unveiled a new "Argentina plan" that will offer 1.37 million sq km (529,000 sq miles) of virgin territory to foreign and local private firms for exploration and development.

Nov. 4, 1991

3 min read

It's a plan separate from the privatization of state owned Yacimientos Petroliferos Fiscales (OGJ, Sept. 30, p. 26). YPF privatization and questions about how, the new plan could become the law led to initial confusion in the Argentine press that prompted Undersecretary of Fuels Raul Garcia to conduct a press briefing detailing the Argentina plan at the WPC.

The president of Argentina has been given a great deal of freedom to dictate economic matters by decree.

Jose Estenssoro, president of YPF and a leader in opening the country to private investment, says the president of Argentina has been authorized to open the acreage by decree on the basis of Hydrocarbon Law 17319 of 1967. That law recognized concessions. However, none was ever granted to private companies.

The presidential decree, reportedly signed the week of Oct. 21, was going through protocol steps.

ARGENTINA PLAN

The Argentina plan will offer exploration rights on 140 blocks based on bids. Block sizes range to a maximum of 15,000 sq km offshore and 10,000 sq km onshore. Some blocks in productive basins are as small as 1,000 sq km.

Of the total area, 852,000 sq km are onshore and divided into 99 blocks. Offshore, 519,000 sq km are divided into 41 blocks.

Companies winning exploration rights and finding commercial oil or gas will automatically be granted an exploitation concession for 25 years. There is a possibility of extending this 10 years.

Operators will have the right to sell their production anywhere they wish. Royalty will be 12% in cash. This is to be paid to provincial governments for onshore production and to the federal government for offshore production.

Tracts will be awarded on the basis of a simple formula by the undersecretary of fuels to a company that bids the highest number of work units (WUs) to be completed in the shortest time.

Work units vary with operations. For example, a 2,000 m offshore hole is worth 1,000 WUs, a 2,000 onshore hole is worth 300 WU. A 3-D seismic registion (square kilometer) is worth 3 WUs offshore and 4 WUs onshore.

A work unit also is defined as equivalent to $5,000. At least 300 WUs or $1.5 million are necessary to bid. In low risk, productive areas cash can be requested and considered an award factor. The time factor must be either 2 or 3 years.

The first call for bids is to be made before yearend.