UK-based Challenger Energy Group believes its gamble on Uruguay's offshore acreage will pay off with a major find in the next few years.
Challenger moved into Uruguay in 2020, requesting a license for offshore block 1, which covers 14,557 km² (5,260 mile²) on the western maritime border with Argentina. It was the first company to get a block in Uruguay's seven-area bidding round. It farmed out 60pc of the block to Chevron last October. It also has the 13,255 km² block 3, which is on the eastern maritime border with Brazil.
Challenger chief executive Eytan Uliel said 3D seismic testing on block 1 should get underway in the final quarter of this year, with the first well to be spudded in around 800m of water in 2027 or early 2028. He said a review of previous data points to the block holding up to 2bn bl of crude.
The company is reprocessing previous 3D data from block 3 — BP operated the block until 2016 — and will hopefully bring in a partner later this year.
Uliel told Argus that Uruguay has the technical and commercial conditions necessary for a world-class find.
On the technical side, he said Uruguay's geology mirrors that of Namibia, where abundant offshore reserves have been discovered.
"We thought [block 1] had promise, but we knew that the missing piece was validation with the presence of source rock," he said. "The oil-producing source rock on the Nambia side seismically mirrors the Uruguay side. This changed everything for Uruguay."
Three other companies, Argentina's state-owned YPF, US-based Apache's APA holding company and Shell acquired the remaining blocks, all deepwater but block 2, after the Namibia discoveries.
The Namibia connection has also sparked interest in offshore blocks in central Argentina and southern Brazil, which have similar geology.
Uliel said Uruguay has simple and understandable petroleum laws and regulations, and the state-run Ancap is quick and transparent with decisions.
"In addition to the very solid technical story, the above ground situation in Uruguay is one of the best I have ever experienced," he said.
Ancap is currently in the process of holding public hearings on seismic testing. The first hearing was in February and the second scheduled for 19 May.
Seismic testing and well development is not without opposition. Uruguayan environmental groups vehemently oppose offshore drilling and the country's labor unions, including the fishing union, are not convinced.
