Petrobras sells its Uruguayan offshore oil exploration rights to Shell

Petrobras, Brasil’s state oil company, announced in a press release that it was selling its offshore oil exploration interests in two blocks off Punta del Este to the Anglo-Dutch company Shell. The sale is still subject to approval by Uruguay’s regulatory authorities and to approval by Uruguay’s state energy company Ancap.

Petrobras owned 40% of the rights to the offshore exploration blocks Ancap designated three and four. The Argentinean company YPF owns 40% of both and the Portuguese oil company Galp Energía owns 20%. Petrobras had agreed with YPF to handle operations in block four and let YPF take charge of operations in block three.

This transaction is not the first significant sale between the Petrobras and Shell. At the end of 2005 Shell sold all of its service stations in Uruguay, Colombia and Paraguay for $140 million USD to Petrobras. Petrobras currently operates 89 service stations in Uruguay.

“This operation represents another important step in the Petrobras’ Divestment Program (Prodesin), outlined in the 2013-2017 Business and Spending Plan”, Petrobras stated.

Petrobras announced a divestment plan to combat its current liquidity problems. The company plans to divest more than $9 billion USD, and has already sold various assets in countries such as Argentina, Colombia and Mexico.

Ancap awarded the exploration rights to blocks three and four in 2009. They were only ones awarded in the Ancap’s Uruguay round I which was designed to increase interest in offshore exploration in Uruguay. The exploration period for blocks three and four ends in May 2014. After that deadline the companies holding the rights to these blocks have two years to build wells.

Ancap conducted Uruguay round II in which it awarded eight blocks: three to British Petroleum, three to British Gas, one to the French company Total and one to the Irish company Tullow Oil which sold 30% of their rights to the Japanese company Inpex.

In March of 2013, Ancap began promoting Uruguay round III  which will feature six blocks.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Alur forms strategic partnership with Parque Sur to source biofuel ingredients from central Uruguay

Alcoholes del Uruguay (ALUR) is a subsidiary of Uruguay’s state owned oil company ANCAP. It produces biofuels, animal feed and other agro-industrial projects.

Tomorrow Uruguay’s state-run agro-industrial company, Alcoholes de Uruguay (Alur), and Parque Sur will sign a public-private strategic agreement to stimulate agricultural production and in center of the country. Alur is attempting to secur a supply of grain for when it opens a second ethanol plant next year.

In a conversation with the Uruguayan newspaper El Observador,  the executive director of Alur, Leonardo De León, said that the agreement aims to transform Parque Sur into a “important supplier” of grain for all of Alur’s different biofuel production processes, including its two biodiesel plants (which use sunflower, canola, and soy) and the ethanol plant (sorghum) it has under construction in Paysandú. “The idea is to develop an agricultural basin where Alur can get the raw materials that it needs for its industrial processes”, explained De León.

Additionally, Parque Sur will be a distributor of the cattle feed that Alur produces and will also store grains for Alur in its industrial park. “This is another advance for the policy of public-private alliances that Alur is creating in different parts of the country” said De León.

As part of the agreement Parque Sur will take over negotiating different planting contracts with grain producers and arranging grain shipments.

Parque Sur is a two-year-old agro-industrial park in Fray Marcos. Its director Claudio Kröger told the Uruguayan newspaper El Observador it expects Uruguay’s industry ministry to grant official recognition as an industrial park soon.

The property features all basic services such as fiber optics, electricity, running water and truck parking. There are four business operating inside the park. One is Uruguay’s principal milk producer, New Zealand Farming System Uruguay (NZFSU) which has built a feed plant that supplies 50,000 cows. The other three businesses in Parque Sur are transportation companies. Additionally, the local government designated two hectares inside the park for innovation and to promote new industrial businesses.

Kröger explained that the strategic alliance between Parque Sur and Alur will expand agriculture in the Santa Lucía river valley, Lavalleja, Canelones, San José. “The idea is to turn this area of the country into a surplus producer of animal feed”, he said. The director of Parque Sur indicated that their cooperation with Alur will involve the supplying grain to the new ethanol plant Alur is constructing in Paysandú. Additionally, they will construct a 30,000 ton grain storage facility in Parque Sur.

Alur is a subsidiary of Uruguay’s state oil company Ancap. Last year, it produced 45,000 tons of biodiesel.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

ANCAP’s desulfurization plant in La Teja is up and running

Ancap’s refinery in La Teja where a new desulfurization plant is now operational

Ancap Uruguay’s state oil company, now has a functioning desulfurization plant which will be inaugurated tomorrow. The plant will reduce the levels of sulfur in Uruguay’s gasoline.

The plant is located in the La Teja refinery and can remove 300 tons of sulfur daily. It cost $360 million USD. Astra Evangelista built a three plant desulfurization complex in La Teja. One of the plants will remove sulfur from diesel fuel leaving 50 parts sulfur per million (ppm). The second plant will remove sulfur from gasoline and leave 30 ppm. The third plant will recover the sulfur and convert it to liquid form. It is expected to produce 40 tons a day which will be sold to industrial consumers for use in products like fertilizer.

The diesel that Ancap currently produces has an average of 4,000 ppm of sulfur. Ancap’s gasoline currently has about 1,500 ppm.

The three firms that bid to construct the project were Técnicas Reunidas of Spain, Jantesa of Venezuela, and Astra Evangelista of Argentina, which at the time belonged to Grupo Repsol YPF but was nationalized by the Argentinean government in 2012 and is now part of the Argentina’s state-owned YPF.

The Partido Nacional’s Ancap board member, Elena Baldoira, explained that the first phase of the project was a feasibility study completed by Ancap and the French consulting company Beicip in 2004. Following the study, Ancap’s board of directors approved the project in June of 2005. A public tender was issued in 2006.

This Uruguayan Business Reports news article is a summarized translation of a news article written by Maximiliano Montautti that appeared in the Uruguayan newspaper El Pais. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

ANCAP is looking for Underground Uranium in Uruguay

ANCAP is analyzing mineral samples taken as part of its oil and gas exploration in the Cuenca Norte for the presence of radioactive elements such as Uranium, Ancap’s head of exportation and production, Hector de Santa Ana, told the Uruguayan newspaper El Observador.

Santa Ana explained that the drillings at Cañada del Charrúa and Pepe Núñez both achieved 100% continuity along the column of the shaft. “This not only permits us to study the geology and the oil system, but eventually the connectivity and the impact that could cause a probable oil field above the subterranean aquifers”, he said.

Now Ancap is working on several new concepts he added. “Particularly, along with oil we are looking for radioactive information in the subsoil. The generator rocks are also uranium traps. Clearly we don’t have sufficient information still, but we are working through the whole well using chemical analysis because radioactive energy producing minerals are under our [ANCAP’s] responsibility”, said Santa Ana.

Santa Ana said that studies of various onshore areas are “evolving step by step from the basic geology to more complete models with entrapments and oil systems. Businesses are taking advantage of these encouraging results to continue investing. The most important thing here is continuing the work”, he said.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

ANCAP finds oil indicators in the first samples extracted from Uruguay’s Pepe Nuñez

The president of Ancap, Raul Sendic, confirmed to the Uruguayan newspaper Unoticias that the first results obtained from more than a hundred geological samples show elevated organic carbon levels and free oil in sandy rocks.

Sendic said that the rocks are located at depth of 450 meters. Although the oil contained would not be enough for economically viable extraction or sale, the results permit a certain degree of optimism about the potential for oil production in the basin.

The identification of free oil in the drilling Cañada del Charrúa shows that the conditions for liquid oil generation exist in the Cuenca Norte.

These results are very important for further hydrocarbon exploration because they add a new source rock that had not been considered previously to the proposed Cuenca Norte oil system. It is a succession of more than 25 meters of black shale with a high proportion of organic material.

In addition to the two types of potential source rocks known from the Cuenca Norte (the Mangrullo and Cordobés formations) geologists are incorporating the new rock known as the San Gregorio formation.

A specialized laboratory in the United States(the National Petrographic Service) preformed the geochemical analysis of Ancap’s drilling samples.

This discovery can be extrapolated to deeper areas in the Cuenca Norte, where the natural geology of the subsoil would create better conditions for the entrapment and accumulation of oil and gas.

Although the possibility of finding natural gas deposits like the one discovered by Petrobas in Barra Bonita, Paraná, Brazil in 1997 exists, experts predict that its more likely oil will be found in Uruguay.

Sendic said that Ancap’s efforts to create a new geological model for the exploration of oil in the Cuenca Norte is beginning to have encouraging results.

In particular, the area located in the west of Uruguay’s Salto department, includes Pepe Núñez, Quintana and Cañada Charrúa where Ancap has completed, at very low exploration costs, a set of stratigraphic drilling and geophysical studies.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper Ultimas Noticias. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguayan government has received 12 proposals for regasification plan

The “principal international companies” have all submitted proposals according to ANCAP’s director.

Uruguay’s executive branch is calling their attempts to generate interest in the construction of a re-gasification for ANCAP a “success”. Twelve companies submitted construction plans for the project in Montevideo bay.

Yesteday Oct. 2, Juan Gómez the director of ANCAP explained that the among those interested in the project are “the principal international companies” specialized in marine infrastructure as well as companies with experience operating offshore regasification plants.

“The call [for interest] was a success and demonstrates there is interest in investing in Uruguay”, said Gómez.

Gas Sayago, the joint venture between ANCAP and UTE handling the regasification plant, will now select which companies proceed to the competitive bidding process. That process beings October 20 and be completed before the end of the year.

The tender winner can be a company or a consortium. ANCAP is predicting that construction companies will join together with companies that have experience running regasification plants and submit joint bids.

Gas Sayago’s tender includes construction and operation of the plant for 15 years. The tender winner will receive $120 million USD for the construction and for operating it for 15 years. Uruguay’s government will handle dredging the port of Sayago to improve access.

This Uruguay Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El Observador. The original news story is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Ancap finds More indicators of hydrocarbons in Pepe Núñez

Study results are better than Ancap predicted

Geological studies conducted by Ancap in Pepe Núñez, Salto revealed that the rock deposits have an elevated level of organic material, much more than had been predicted, according to Raúl Sendic, the president of Ancap.

According to Canadian experts who reviewed the data, the rocks analyzed indicate Permian rock formations not the Devonian formation which had been predicted. Mr. Sendic explained that between 1.5% and 3.5% of a Devonian formation is usually organic material. However, the study found the formation is 13% organic material.

Mr. Sendic clarified that “[Ancap] doesn’t want to say that Uruguay has oil fields, but that we have a very high hydrocarbon generating capacity”.

Sendic remarked that this is the first Permian rock found in the country. “We are going down a very good road, this has opened the search panorama for us” and he added that after these results we can say Uruguay posses “an enormous generating capacity”.

The president of Ancap said that before the end of the year they will begin explorations in the town of Constitución , also in Salto province.

New meeting with Argentina’s YPF

Mr. Sendic also reported that he had his first meeting with the new president of YPF, Miguel Galuccio. He reported that the meeting was “very positive, the new president is very professional”.

Both firm’s want to carry out further soil exploration work and possibly “work together during the summer to provide loyalty services to Argentineans visiting Uruguay”.

Finally, he confirmed that within 15 days Sendic and his technical team will be in Montevideo to present details on the Puntas de Sayago re-gasification plant project.

This Uruguay Business Reports news article is a translation of an news story that appeared in the Uruguayan newspaper El País. The original Spanish language article is a availablehere. Uruguay Business Reports news translation by Donovan Carberry.

Uruguay’s state-run companies post budget deficit of $1.14 billion USD

Budget proposals submitted for 2013 by UTE, ANCAP, ANTEL, Correos and OSE predict that their total deficit will reach $1.14 billion USD. Most state companies will take on debt to cover the gap.

Uruguay’s six principal state-run business will all run deficits in 2013 according to budgets they proposed to Uruguay’s central government. The budget proposals are expected to be approved.

In every one of Uruguay’s major state-run companies expenses and investment surpassed income. The deficits will force Uruguay’s state-run companies (with the exception of the telecommunications provider Antel which can cover its deficit with cash) to use up saved resources or take on millions of dollars in external financing.

Generally the proposed budgets use conservative revenue estimates but in cases like UTE, which is vulnerable to the changes in climate that affect hydroelectric dams or Ancap which is subject to crude oil price fluctuations, deficits could be higher than predicted.

For the first time Antel is predicting a budget gap of $36.5 million USD. Nevertheless Antel is the state-owned company in the best financial condition because it is holding onto a large enough cash balance to cover next year’s expected shortfall.

UTE also stands out among the state-owned firms. They are predicting a whopping $576 million USD budget shortfall. The state electric company is predicting revenues of $2.066 billion USD and expenses at $2.642 billion, which leaves $576 million USD. UTE expects to cover that difference with $445 million USD in external financing and $131 million of their reserves. The external financing is associated with $370 million in outside investment in UTE’s new projects. The execution of those investment projects is conditional on the allotment of funds by Uruguay’s Office of Planning and Budgeting.

This Uruguay Business Reports news article is a translation of an article that appeared in the Uruguayan newspaper Unoticias. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

ANCAP will file legal charges over Pluna’s bounced checks

ANCAP’s board of directors resolved yesterday to order its legal department to file allegations of criminal and civil misconduct concerning checks Pluna issued to ANCAP which bounced. According to Juan Amaro, the ANCAP board member selected by the Partido Colorado, ANCAP’s board did not re-affirm a previously issued resolution to freeze legal complaints against Pluna’s board of directors for checks Pluna S.A. issued without funds to pay for.

Amaro also said that the Director of ANCAP, Raúl Sendic, confirmed there is a “commitment” from the executive branch which guarantees ANCAP will be paid in full.

ANCAP’s board also unanimously approved an “external audit” to evaluate the handling of Pluna’s now $28 million debt to ANCAP. Amaro proposed the audit: “the audit will clarify the financial procedures which lead to this massive liability as well as improve company’s [ANCAP’s] corporate image. The important thing is that ANCAP is not linked to the mismanagement which brought down the airline” said Amaro.

ANCAP is already moving forward with an internal investigation into why the company allowed Pluna S.A. to pay with checks deferred 180 days when the maximum was supposed to be 30 days.

 This Uruguay Business Reports news article appeared in the Uruguayan newspaper El Observador. The original article in Spanish can be found here. Uruguay Business Reports translation by Donovan Carberry.

ANCAP News Brief: CARU authorizes new ANCAP port terminal in Paysandu

The Rio Uruguay Administrative Commission (CARU) accepted plans for the “ANCAP [the state oil company] plant port terminal in Paysandú” that seek to benefit Uruguay’s oil and gas supply chain. The President of Uruguay’s CARU delegation, ship captain Gastón Silbermann, said that the measure was approved because it isn’t likely to affect the river or Argentina. Silberman explained that the objective of the work at this port terminal is to guarantee efficient and secure unloading of hydrocarbons and to transport dry bulk cargo by river which would help ANCAP’s supply chain.

 This Uruguay Business Reports news article is a translation of an article that appeared in TodoLogistica. The original Spanish language article can be found here. Uruguay Business Reports translation by Donovan Carberry.