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LatAmOil COMMENTARY LatAmOil

Filmus indicated, though, that the adminis- shale formation contains around 16bn barrels of
tration of Argentinian President Alberto Fer- crude oil and 310 trillion cubic feet (8.78 trillion
nandez was not eager to press ahead with legal cubic metres) of gas in recoverable reserves.
action against these companies, as some of its
predecessors did. Not on the same level
Instead, he said, Fernandez and his cabinet It is not clear, though, whether Argentina’s new
are more interested in making sure that Argen- plan will yield similar results.
tina establishes a larger presence in the waters of For one thing, the offshore areas may not
the South Atlantic Ocean. They see oil and gas be quite as enticing as Vaca Muerta. When BP
projects as a means of achieving this goal, and to made its pledge to Argentina’s Foreign Ministry,
this end, they are trying to establish a legal foun- the shale formation was already known to con-
dation for the expansion of offshore exploration tain large amounts of oil and gas. By contrast, the
work, he stated. sections of the South Atlantic covered by the bill
The secretary pointed specifically to the extending the zone of national sovereignty are
Argentinian National Congress’ approval of not as well known or understood.
a bill extending the outer limits of sovereignty Moreover, the extent of their potential may
not become clear for some time. TGS (Norway)
over the continental shelf and the sea bed sover- shore area in the fourth quarter of this year, but it “
eignty from 200 nautical miles (370 km) to 350 is due to launch a 3D seismic survey in the off- Argentina is
nm (648 km). This move “will widen the pos-
sibilities [for] exploiting hydrocarbons in the will take time to collect and then interpret 17,800 taking a relatively
South Atlantic,” he said. square km of data – and even more time to hold conciliatory
He also said that the IOCs that have drawn tenders, negotiate with potential investors and
Buenos Aires’ ire for recognising UK claims to progress to the sort of drilling that might reveal approach, but
the islands would not be excluded from bidding just how much oil and/or gas is in the area.
contests covering the expanded offshore zone. For another, market conditions may not be its offer may
The Argentinian government will accept offers favourable enough to convince the independ-
from these companies, provided that they exit ent companies that have been the most active in not be overly
the waters surrounding the Falklands and agree the waters surrounding the Falklands – Argos attractive to
not to return without Argentina’s consent, he Resources, Premier Oil and Rockhopper Explo-
said. ration, all based in or listed in the UK, and Navi- budget-conscious
“With the invitation to the oil round, some tas Petroleum, based in Israel – to take a risk on
of those companies might desist [from] operat- the frontiers of Argentina’s oil and gas industry. investors
ing in the Falklands zone and, following a sworn Oil prices may have risen from the historic lows
statement, could move to operate in [Argenti- they hit in April, but they are still weak enough
na’s] continental shelf area,” he was quoted as to raise serious questions about the viability
saying by Mercopress. of investments in offshore fields, especially
those located in underexplored areas that do
BP’s precedent not have much development or transportation
There is some precedent for investors to make infrastructure.
such a shift. As such, the Fernandez administration’s
As Mercopress noted, BP has already done so. plans for the South Atlantic will probably not
In 2014, the UK-based super-major decided that inspire much enthusiasm in the near term. They
Vaca Muerta, a massive shale formation located do appear to represent a relatively conciliatory
mostly within Argentina’s Neuquen Province, approach with respect to the Falklands, but they
was a better prospect than the Falklands off- may not be overly attractive to the budget-con-
shore zone. To this end, it pledged in a letter to scious investors of 2020. ™
Argentina’s Foreign Ministry that it would exit
that part of the South Atlantic. EDITOR’S NOTE: A story in last week’s AfrOil, "Mexico
This move bore fruit. BP, through its major- says Sempra must build new gas export facility to
ity-owned Pan American Energy affiliate, has secure permit,” stated that the Mexican government
become one of the largest foreign investors wanted Sempra’s IEnova subsidiary to build a sec-
in Vaca Muerta’s unconventional oil and gas ond export terminal at the same site as the existing
deposits since 2014, and it is also taking part in Energía Costa Azul facility. The second export termi-
the development of conventional fields in other nal is actually slated for construction at a different
parts of Argentina. It has committed to invest- location, in Topolobampo. AfrOil regrets the error.
ing billions of dollars in the South American
country.
This is perhaps the opposite of what one
might expect from a British firm that was once
controlled by the British government, which
continues to contest Argentina’s territorial
claims in the South Atlantic. Nevertheless, BP
chose Vaca Muerta over the Falklands – and
its choice was probably logical, given that the
former contains vast hydrocarbon reserves.
According to data from the US Energy Infor-
mation Administration (EIA), the Argentinian

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