2022 saw the award of around 60 blocks in Brazil, most as a result of the ANP’s 3rd Open Acreage Concession Bid Round. However, licensing activity in South America has remained flat since 2019.
Uruguay’s Open Round saw success with new blocks awarded to APA Corporation (Apache), Challenger Energy and Shell, driven by the successes off the coast of Namibia. Argentina, where unconventional liquid production in the Vaca Muerta basin continues to reach record highs, was the venue of awards to Chevron, Selva Maria and Recursos y Energia Formosa.
We do not see the widespread divestment of assets in South America as we see in other regions of the world.
Meanwhile, Colombia held the Ronda Colombia 2021 with 30 blocks reported to have received bids. On the deal side, Brazil has seen the largest number concluded over the past 12 months due to the ongoing Petrobras sales of onshore fields as they focus on the ultra-deep water. The most active companies in Brazil acquiring upstream assets were 3R Petroleum, Prio SA, Shell and Gas Bridge. The largest deal done was in Venezuela with the Rosneft sale to Russian government vehicle Roszarubezhneft.
An Orange Basin equivalent
Argentina will see what is touted as the country’s first deep-water well drilled in 2023. The much-anticipated high-impact Argerich-1 well will be operated by Equinor in Block CAN_100 situated in around 1,500 m of water depth and has a planned total depth of around 4,000 m. Equinor had farmed into CAN_100 in 2019 and took over operatorship from YPF. Shell is also a partner in CAN_100 after farm-in in 2021. Research suggests that the area is in a similar geological setting to the Orange Basin of Namibia where multiple giant oil discoveries have been made.
Landlocked Bolivia has suffered badly with its falling gas production. Gas production has seen a steady decline since 2015 and in a few years, Bolivia will turn into a significant importer. A serious push is needed by YPFB in Bolivia to reverse this trend for a country that was once the gas hub for supply to the southern part of South America.
It remains to be seen what will happen in Venezuela. Ongoing discussions continue within the USA government to scale down sanctions. It is a step-by-step approach with Chevron given permission to produce oil and delivering its first shipment of heavy crude to USA refiner Phillips 66 in Texas in early January 2023. ConocoPhillips will be watched closely as it seeks to recover the large debt it is owed following nationalisation of its assets in 2007.
In another move, the US Treasury granted a licence to Trinidad and Tobago to develop the Dragon gas field jointly/in business with Petróleos de Venezuela S.A. (PDVSA). The offshore field with reserves in excess of 4 TCF lies on the Venezuelan side of the maritime boundary and in the vicinity of the Shell-operated Hibiscus gas infrastructure. There are large undeveloped gas reserves in Venezuelan waters and the facilities of Dragon could be the springboard for a large gas hub exporting gas into Trinidad and Tobago.
Ian Cross – Moyes & Co
