Prospects in Latin America spur oil investment throughout the region
Investors are wary as the Argentinean and British row over the Falkland Islands, as they continue to flood Latin America with oil prospects. Argentina has been opposing the British government’s control of the islands because of its rich oil resources. Its interest on the island has sparked anew as an oil province surfaces near the territories of the U.S. and other major oil-consuming countries.
Analysts disclosed that the islands offer a possible source of huge oil reserves (and probably natural gas) that is more accessible than those made available by countries in the Middle East. For this reason, some countries have been formulating strategies on how to invest in this region whose location is of geo-political significance.
Recognizing Falkland Islands potential, nearby countries have taken steps to take advantage of these developments. Uruguay, for instance, sought to team up with British and French oil companies to explore the islands. Brazil is currently constructing a major crude oil and gas production facility and is spending billions of dollars to complete it. Argentina and Spain are having disputes on the issue on Repsol YPF and the need to put in more funds for oil output. Venezuela has set off some changes in its oil industry.
China is not to be left out either. It is spending huge amounts of dollars to purchase oil and gas interests in the island. Cuba on the other hand has been receiving assistance from Brazil regarding energy development.
Big oil companies like Tullow Oil, Total, BG Group, and BP have collectively won 8 offshore blocks in a bidding run by the Uruguay government. This is according to Ancap, the country’s public energy firm.
It also disclosed that these 4 big firms have bested 19 others who participated in the bidding and that the consortium has pledged a staggering US $1.56 billion – obvious signs that Uruguay and its oil and gas potential is being eyed intently by oil investors.
Bidders who were not so lucky to have captured the 8 offshore blocks consisted of Mobil, Shell, Exxon and a syndicate of oil companies like Cepsa and Murphy of Spain and YPF of Argentina.
According to analysts, the pledge which will be released within a three-year spread can be a catalyst for more oil exploration ventures into Uruguay. However, Roberto Kreimerman, Uruguay Minister for Mining and Energy revealed that the US $6.5 billion of oil investment is actually needed for this program.
A few weeks ago, Sinopec of China became a 30% stakeholder in Petrogal Brasil when it invested US $4.8 billion in the company. Under the agreement, Sinopec will also extend US $360 million worth of loans to the firm. Petrogal Brasil is a company engaged primarily in the exploration and production of Brazilian oil and gas for Galp Energia of Portugal.