Argentine Province Expects Big Oil To Bid In Shale Block Auction
Argentina's Neuquen province expects major global energy companies, including Royal Dutch Shell, Chevron Corp and Exxon Mobil Corp , to bid in a May auction of 11 oil blocks, its energy minister said on Wednesday.
The exploration and development blocks include conventional and unconventional oil and gas resources, most of them in the vast Vaca Muerta shale formation, considered one of the world's biggest shale deposits.
The results are expected for August.
"For unconventionals, the players will be the majors," Neuquen Energy Minister Guillermo Coco said in Houston on a road show to attract foreign capital. "Chevron, Exxon, Shell have shown interest in Vaca Muerta. They will compete for sure."
Companies interested in participating would have to form joint ventures with the provincial oil company, Gas y Petroleo de Neuquen (GyP), with 50-90 percent stakes, depending on the block size and resources.
"We want to be the minority stakeholders in all the unconventional projects and also be an important stakeholder in conventional developments," Coco added.
According to Argentine law, it is possible for companies to form consortia to develop conventional and unconventional resources separately in a single block.
President Cristina Fernandez has given the provinces more leeway to set up energy development programs, a reflection of the huge resources needed to exploit the fields.
The Neuquen basin's crude output was 224,000 barrels per day (bpd) in 2013, more than a third of the country's production, and it also produced 2.2 billion cubic feet per day, according to the regional government's figures.
The first bidding round in Neuquen was held from 2008 to 2009 and there have been another two rounds since. At least 57 blocks have been assigned and some of the properties given back to GyP are being re-offered.
In the first round, the regional government did not demand access bonds as will be the case in this round. Companies could pay as much as $80 million to access mid-sized areas.
The crude produced in the new areas has to be sold to refineries in Argentina through individual supply contracts, the minister added.
He expects that this will not be an issue, even though the controlled internal gas price is the cause of frequent complaints from operators working in the country.
(Reporting by Marianna Parraga; Editing by Terry Wade and Andre Grenon)