Oxy Lines Up US$100mn Spending on 2 E&P Blocks in Peru

US oil company Occidental (NYSE: OXY) signed Monday one new exploration and production contract and modified a second with Peru's government investment agency Perupetro for blocks in the northern part of the country, the country's energy and mines ministry said in a statement.

Occidental plans to invest about US$50mn by itself in block 103, and with partners plans to invest another US$50mn in block 64, a Perupetro spokesperson told BNamericas.

The new contract on block 103 is comprised of five exploration phases, which include carrying out 400sq km. of new 2D seismic and drilling at least two wells or their equivalent in Peru's exploratory work units (UTEs).

Block 103 is located between the provinces of Alto Amazonas and Loreto in northern Peru's Marañón basin. The block covers 870,896ha.

In April, Occidental signed an exploration and production contract with Perupetro for block 101, also in the Marañón basin.

Also on Monday, Occidental modified a contract with Perupetro for block 64, bringing in US company Amerada Hess and Canada's Talisman as partners.

Occidental will now have a 50% stake in the contract, as opposed to a 100% stake before, while Amerada and Talisman will have 25% each.

The original contract is comprised of six exploration phases, which include reprocessing 1,600 sq. km. of new 2D seismic and drilling at least four wells or their equivalent in UTEs.

The seismic work has been completed and Occidental is now in the third exploration phase and is drilling its first well on the block, which it expects to complete by year-end, the spokesperson said.

Block 64 covers 953,795ha, and like block 103, is located between the provinces of Alto Amazonas and Loreto.

US-based oil company Burlington Resources (NYSE: BR) withdrew from its 25% stake in block 64 in 2003 because of local opposition to exploration and "it did not have any more possibilities to keep investing," the spokesperson said.

Burlington and Occidental began exploring block 64 in 1999 but the contract was stalled due to force majeure. Now Occidental has signed agreements with local communities and exploration work is going ahead without any problems, the spokesperson said.

Occidental began operations in Peru in 1971.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports.

Click here for a Free two week trial to our Latin America Oil & Gas information service.