Pan American Requests IFC Financing for Golfo San Jorge

Argentine oil company Pan American Energy (PAE) has asked the International Finance Corporation (IFC) to finance up to US$250mn of its 2005 capex program to develop three blocks in the Golfo San Jorge basin, PAE said in a document published by the IFC last week.

The blocks are Cerro Dragón, Piedra Clavada and Koluel Kaike. Total hydrocarbons production on the three blocks is currently 128,200 barrels of oil equivalent a day, most of which comes from Cerro Dragón, a Pan American spokesperson told BNamericas.

The financing is pending IFC approval and expected to go before the IFC board on June 30, the document said.

Pan American's total investment in Argentina for 2005 is budgeted at US$540mn, of which San Jorge is pegged at US$442mn, including US$419mn for Cerro Dragón, the spokesperson said. Of that, IFC is expected to contribute up to US$120mn on its own account and raise up to US$130mn in syndicated B loans, the document said. The money should be disbursed this year, probably in several tranches, the spokesperson said.

The aim of the capex program is to increase gas production in the Golfo San Jorge to up to 6.5 million cubic meters a day (Mm3/d) by year-end from 5Mm3/d at present, and oil production 10% to about 100,000 barrels a day (b/d), the spokesperson said.

The project contemplates drilling for oil and gas, optimization of water-flooding projects and installation of facilities in Cerro Dragon, and drilling and water flooding projects in the Koluel Kaike and Piedra Clavada blocks. The spokesperson could not say how many wells will be drilled in the blocks, but that Pan American currently has 45 drilling and workover teams in the San Jorge basin area. The Cerro Dragón block is primarily in Chubut province, with a small portion in Santa Cruz province. Both the Piedra Clavada and Koluel Kaike blocks are in Santa Cruz.

PAE holds interests in 13 oil and gas production blocks in Argentina and 10 active oil and gas production and development blocks in Bolivia through its indirect Bolivian subsidiary Chaco. In addition PAE holds interests in 15 exploration blocks, eight in Argentina and seven in Bolivia. The company's blocks in Argentina are located in the four major hydrocarbon basins, San Jorge, Austral, Neuquén and Northwest.

PAE was the second largest oil and gas producer in Argentina during 2004, accounting for about 15% of the country's total oil production and some 12% of its total gas output. Pan American Energy is 60% owned by UK company BP Amoco, with Argentina's Bridas holding the remaining stake.

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