Ancap: First-Ever Domestic Gas Output Due 2010-15

Uruguay's national oil company Ancap is preparing to start natural gas production in its offshore Punta del Este basin from 2010-15 as initial appraisals have shown the presence of hydrocarbons there.

"It's a frontier basin, but evidence of hydrocarbons has been found there," Ancap geology department head Hector Alvarez told BNamericas during the Latin America Gas Summit 2006 in Sao Paulo.

Although Ancap still plans to invest some US$22mn in exploration to detail the basin, initial appraisals have shown there could be probable reserves of 1-2 trillion cubic feet in the unexplored basin, Alvarez said.

This would be the first-ever natural gas production in Uruguay's history. The country produces some 435 barrels of oil a day, roughly 1% of its demand.

In 2006, the company plans to invest US$6mn in exploration in Uruguay, including the purchase of 7,500km of seismic data. Another US$2mn will be spent this year in other regions of the country.

The company in 2007 plans to spend US$15mn and the first exploration well is due to be drilled in 2008, Alvarez said.

Ancap is motivated by forecasts of higher gas prices in the continent and rising international oil prices, he added.

Additionally, the country's government is worried about guaranteeing energy supply as it relies on neighbors for gas, Alvarez said in reference to Argentina's recent moves to cut back on gas exports to Uruguay and other countries.

Uruguay's natural gas demand is estimated at some 2 million cubic meters a day (Mm3/d), mostly supplied through a 24-inch pipeline that stretches from Buenos Aires to Uruguay's capital Montevideo.

The findings are located at water depths of some 200 meters and production rate is estimated at some 10Mm3/d, Alvarez said.

"This is enough to supply the local market and to export, but for that new infrastructure has to be built," he said.

Although initial investments are planned by Ancap alone, Alvarez said there is enough room for other oil companies to invest in Uruguay, alone or in partnership with Ancap.

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