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Chilean government launched a plan for private oil companies to invest in oil & gas
Petroleumworld
CARACAS
Petroleumworld.com 05 30 07
The Chilean government has launched an international campaign to invite private companies to invest in exploration and production (E&P) of hydrocarbons --oil and gas-- in Chile. Those international and local companies interested in developing E&P projects in the country will sign a Special Operating Contract (CEOP) with the State of Chile, the Chilean Mining Ministry anounced on Tuesday.Legal definition of CEOP: A CEOP is a “Special Operating Contract” that the State of Chile, represented by its Mining Ministry, signs with a company or consortium of companies for the exploration and exploitation of hydrocarbon wells.
These contracts, which may be awarded through direct negotiation or as a result of a public tender, establish the corresponding conditions, stages and investments that the Contractor will undertake during the Exploration Phase. In addition, they define the system and mechanisms through which the State will compensate the Contractor during the Production Phase, either in the form of hydrocarbons or through direct payment.
The CEOPs have a maximum duration of 35 years for the development of the Exploration and Production Phases.CEOPs currently in force in Chile: Since the beginning of this year, two companies, Layne Energy (1) and March Resources (2), have negotiated and signed important CEOPs with the State of Chile represented by the Mining Ministry. In addition, US-based GeoPark Holdings Limited (3) is already producing natural gas in the Magallanes Basin under a CEOP signed in 2005.
On April 17, through its local subsidiary Layne Energía S.A., US-based Layne Energy Inc. signed a contract for the exploration and development of coalbed methane (CBM) projects in the Arauco coal basin of central-southern Chile, close to the industrial city of Concepción. Layne has undertaken to invest up to US$ 17 million during the exploration stages stipulated in its CEOP. In other countries, the results of CMB exploitation have been positive and, according to data from the University of Montana (August 2006), it currently represents 7% of natural gas production in the United States and 5% of world output.
On May 9, Canada’s March Resources Corp. signed two contracts for hydrocarbons exploration in the Tamarugal Basin, close to the town of Pica in northern Chile. The activities that March Resources has undertaken to develop in the exploration phases of the two blocks envisage an investment of US$ 20 million.In addition, GeoPark has held a CEOP since mid-2005. This covers an area of 3,700 km2 in the Magallanes Basin where the company is producing approximately 252,000 m3/day of natural gas in the Fell Block.
New opportunities: In June, ten geographic blocks in the Magallanes Basin of the far south of Chile will be put out to tender for the exploration and possible production of oil and natural gas. The term sheets for these tenders will be available on the Mining Ministry’s website (www.minmineria.cl) as from June 10.The Magallanes Basin is part of the same geological formation as Argentina’s Austral Basin, which has historically produced over 500 million barrels of oil and more than 10 TCF of natural gas. So far, this is the only region of Chile in which the production of hydrocarbons has proved commercially viable.
The Magallanes Region has well-developed road and port infrastructure for the exploration and production of hydrocarbons, with good road access to most of the blocks as well as a network of oil and gas pipelines for the distribution of hydrocarbons.(1) Layne Energy Inc is a division of Layne Christensen Company (LAYN – NGS), a company based in Mission Woods, Kansas (www.laynechristensen.com).
(2) March Resources Corp. (MCF – TSX – V) is a junior company based in Alberta, Canada, dedicated to the exploration and production of gas and oil (www.marchresources.ca).
(3) GeoPark Holdings Limited (AIM – GPK) is a junior company based in Bermuda, dedicated to the exploration and production of gas and oil (www.geo-park.com).
For further information, please contact Jesús Figueroa at the Chilean Mining Ministry (jfigueroa@minmineria.cl).
Petroleumworld 29 05 07
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