Oil Majors Converging Here Could Mean A New Hotspot

February 2016, Vol. 243, No. 2

Even with oil at $30, the petroleum industry continues to see a few bright spots. Particularly when it comes to offshore activity — such as Shell this week announcing the first natural gas production from its ground-breaking Corrib field off the northwest coast of Ireland.

And this week also saw another unexpected event in the offshore sector — halfway around the world in South America.

That came in Uruguay. Where major European producer Statoil announced a surprise farm-in on one of the world’s up-and-coming exploration areas.

Statoil said Monday it will acquire a 15% interest in Block 14, majority-owned by Total in the offshore of Uruguay, just south of Brazil.

Statoil is acquiring a 15% interest in Block 14, offshore Uruguay.

This is an interesting deal, given that most major E&Ps are cutting back spending on new projects right now. Showing that Statoil must see something it finds very attractive here — especially given this is a major step away from the company’s core operating area of the North Sea.

The other partner currently involved in the block is ExxonMobil — showing that a range of majors are converging in this part of the world.

The prize here could be something similar to recent offshore mega-discoveries in Brazil, given that the Uruguay blocks are located just south of those basins. With Uruguay perhaps being a more attractive way into such plays at the moment, after scandals and corruption have swept over the Brazilian petroleum sector the last few months.

The first drilling at Block 14 is expected within a few months, meaning we won’t have to wait long to see what the potential might be here. Watch for results from this emerging district.

Here’s to going down south.

By Dave Forest, Oilprice.com

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