Uruguay Opens Bids for Offshore Oil, Gas Blocks

On December 1-3, Uruguay Energy Ministry and ANCAP, the National Oil Company, will launch the offshore licensing round for exploration and exploitation of gas and oil. The blocks on offer, lie in the Punta del Este and Pelotas basins, where water depths range from 50 to 1500 meters, as well as another basin further offshore called Oriental Del Plata. The blocks' areas range from 2,500 to 10,000 square kilometers.

In the offshore of Uruguay are situated Punta del Este basin, the southernmost region of Pelotas basin and Oriental del Plata basin. These basins are associated genetically to the fragmentation of the supercontinent Gondwana and later opening of the Atlantic Ocean.

Punta del Este basin and the Uruguayan portion of the Pelotas occupy a surface area near 11.000 km2 and 15.000 km2 respectively, with a sedimentary record of paleozoic, mesozoic and cenozoic age of over 7000m. Both basins are covered by a variable water sheet from 20m to over 1000m.

In addition to new deep 2D seismic studies by Wavefield Inseis, the whole seismic, stratigraphic and structural integrated studies allowed ANCAP's technicians to establish a number of leads and plays located in offshore Uruguay in bathymetries ranging from depths less than 200 to depths greater than 1500 meters.

The main exploratory situations are linked to the sedimentary sequences corresponding to the prerift, sinrift and sag evolution phases of these basins.

In South America, between Argentina and Brazil, is placed Uruguay, an enjoyable and pacific country with a generally mild and stable climate year 'round, favored by its smooth geography. Uruguay not only has a high life standard and is considered one of the safest countries in the world, but also stands out due to its huge concern with the environment, as well as to its large variety of landscapes.

The Uruguayan economy has experienced a sharp growth in the last years, supported both by the favourable external context and the dynamic recovery of the domestic activity. In the last years, investments have been growing faster than during the nineties. Especially remarkable were the Direct Foreign Investments (DFI), reaching the highest historical levels.

The government of Uruguay considered essential to prioritize the investment in physical and human capital. According to this objective, a new regulation for the Investments Law Nr. 16.906 (Decree Nr. 455/007) was passed and the Support Unit to Development and Investments in the Private Sector was created (June 2007).

The new investments promotion regime, which was established in the regulation of the Investments Law, aims at granting tax benefits to companies carrying out investment projects that take into account the objectives of the economic policy.

Under Uruguayan law, mining rights are not conceded, so that, the Contract type to be subscribed is a Production Sharing Agreement and the Contractor will be paid according to the percentages agreed in it.

The fiscal conditions include no signature bonus, royalties or taxes, only require the social security fees.

The participation of the State, the portion of the production of hydrocarbons to be disposed to recover costs and investments and the profits the company intend to retain for itself will have to be offered in the bids. ANCAP will evaluate these proposals with the corresponding exploratory program offered.