Page 12 - LatAmOil Week 03 2020

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On a global level, Tokyo-based MODEC has a total of 18 platforms in Latin America, Africa, Asia and the Pacific.
More than half of these are now deployed in Brazil’s pre-salt areas, where oil and gas can be found under layers of salt trapped beneath the ocean floor.
The pre-salt zones, which cover an area of around 149,000 square km off the coast of the
southern states of Santa Catarina and Espírito Santo, are among the world’s most promising reserves. They hold oil and gas that is widely considered to be of high commercial value and of very good quality.
Indeed, Petrobras is currently engaged in a major divestment programme that aims to sell off non-core assets so that the company can focus on pre-salt projects. ™
ARGENTINA
Argentina hopes new regulations will attract oil, gas investment
ARGENTINA’S President Alberto Fernandez is reportedly gearing up to send legislation to Con- gress outlining plans for the establishment of a new regulatory framework for oil and gas invest- ment. Officials in Buenos Aires hope the bill will help the country secure the foreign assistance it needs to develop its largest shale play, the Vaca Muerta formation.
The bill will be designed to attract invest- ment in both conventional and unconventional hydrocarbon fields, Reuters reported, citing a spokesman for the presidency.
Fernandez, who took office in early Decem- ber, is eager to drum up interest in Argentina’s oil and gas sector. To this end, he held meetings with representatives of the largest investors in the country’s oil and gas sector last week. Guill- ermo Nielsen, the president of the state-owned oil company YPF, led the meetings, Reuters reported.
The bill is expected to be presented to Con- gress soon. It will then be discussed during extraordinary legislative sessions, which are due to take place in February, according to local media.
The Vaca Muerta formation, one of the largest shale deposits in the world, is located in Neuquén Province in the central part of the Patagonia region. It is around the size of Belgium and contains around 308tn cubic feet (8.722tn cubic metres) of shale gas, according to the US Energy Information Administration (EIA).
Investment conditions
The Latin American country has long been keen to attract foreign partners for Vaca Muerta pro- jects, but it remained isolated from global finan- cial markets for years. Fernandez’s predecessor, Mauricio Macri, tried to improve investment conditions and did enjoy some measure of suc- cess. Late last year, though, Macri lost his bid for re-election, largely because voters blamed him for the country’s economic stagnation and soar- ing inflation.
Both Fernandez and Macri saw Vaca Muer- ta’s resources as a means of curbing energy shortages. According to the government’s calcu- lations, investors would have to pump around $200bn into the shale formation to plug the gaps in domestic energy supplies.
Argentina has already attracted significant interest from outside investors. In 2017, the gov- ernment approved a package of deals between YPF and a group of foreign majors – Chevron, Total, Royal Dutch Shell and Pan American Energy, a unit of BP. These companies agreed to invest $5bn collectively in the formation in 2017 and US$15bn per year from 2018 onwards.
Following the deal, YPF said it intended to spend around 20-30% more on Vaca Muerta projects than it would have done previously. This would put the company’s investment at around $2.3bn per year.
Despite these impressive figures, there are still concerns that these projects could be held back by a lack of oil and gas infrastructure and transport links in the region. After years of eco- nomic stagnation, Argentina may have difficulty addressing such challenges.™
Argentinian President Alberto Fernandez (Photo: La Nacion)
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Week 03 23•January•2020