Brazil’s Petrobras in High Risk Deal in Argentina

Brazil’s Petrobras Energia is involved in a "high risk" natural gas exploration and production investment in Argentina’s extreme south Santa Cruz province, said CEO Alberto Guimaraes in Rio Gallegos.

The operation involves two gas deposits which according to Mr. Guimaraes and following technical assessments, can be considered "very promising".
The agreement between the Brazilian company and the provincial government of Santa Cruz extends for eight years and covers two areas identified as Glencross and Chiripá. Private assessments indicate natural gas reserves in the area could be as high as 26 billion cubic metres.

Mr. Guimaraes estimates that in the next eight years Petrobras will be able to begin extracting six million cubic metres per day equivalent to the volume Argentina currently imports from Bolivia.

According to the contract, Fomicruz, the provincial Mining Promotion company of Santa Cruz holds 13% of the operation, a percentage which can be increased in the future. Besides during the exploration stage 60% of staff and labour must be from Santa Cruz and in the exploitation stage, 80%.

Mr. Guimaraes said that a training project for local suppliers will be launched in the coming weeks so "they can all compete in similar quality and safety standards as demanded by the company".

"Although engineers tend to be quite conservative in their estimates we believe the operational timetable will show us that gas should begin to be pumped in commercial volumes in probably five years time", said Guimaraes who revealed that Petrobras has already invested another 240 million US dollars in exploration for oil and gas in Patagonia.

However Guimaraes warned that hydrocarbons production is a permanent challenge: "we can have a very good picture of what might be down there geologically, but you’re not certain until drilling begins". Guimaraes revealed that Petrobras Energia is involved in six Latinamerican countries and in the next five years is planning to invest 2.4 billion US dollars, "of which 50% in Argentina".

As to offshore exploration in the South Atlantic, Mr. Guimaraes was more cautious admitting that Petrobras has contracts with Argentina’s government owned Enarsa and is in the process of doing something similar with two other companies, "but it’s a most risky business, full of uncertainties. However we have the most advanced technology in that field in the world, so we’re basically optimistic".

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