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Offshore Support Journal

Offshore Support Journal

South America: regionís potential yet to be fulfilled

Mon 24 Aug 2015 by Martyn Wingrove

South America: regionís potential yet to be fulfilled

Exploration success in the seas off the northern coast of South America has led to renewed interest in the continent during the last five years, but last year’s drop in oil prices has led to some deferrals of exploration projects. Apart from Brazil, Venezuela has traditionally been the most active offshore market, followed by Argentina. However, the governments in Colombia, Guyana and Suriname are attracting exploration investment. There is also some activity on the west coast offshore Ecuador and Peru. In total, there are around 20 offshore support vessels (OSVs) active in South America outside of Brazil, and a few more are coming.

However, there are challenges of operating in these regions, which OSV owners need to compensate for, said a broker working for Westshore. “There has been some activity in Colombia and Venezuela and recently offshore Suriname and Guyana, but the tax implications mean it is costly to operate in these regions,” he explained. “There are projects ongoing and some that have not come to fruition. Because of the low oil prices, some projects have been delayed and others postponed.” He said that, in some instances, explorers were cutting back the well numbers instead of cancelling projects outright.

The broker said term charter rates for OSVs vary between countries, depending on the tax liabilities and local working requirements as well as the environmental conditions. For example, rates for small anchor handlers operating in Venezuela were around US$20,000 per day, but in Argentina, where vessels may encounter harsher conditions, daily rates were between US$30,000 and US$35,000.

There have been recent exploration successes offshore Guyana and activity in Suriname. ExxonMobil made a significant oil discovery in the Stabroek block about 190km off the coast of Guyana. ExxonMobil president for exploration Stephen Greenlee said the company was encouraged by the results of the well on the block. “Over the coming months, we will work to determine the commercial viability of the discovered resource, as well as evaluate other resource potential on the block.” ExxonMobil had Transocean’s drillship Deepwater Champion on charter for the drilling work.

Brokers said rival US-based explorer Apache Corp used 2007-built drillship Stena DrillMax earlier this year for exploration drilling in Suriname. It also fixed platform supply vessels (PSVs) Trounson Tide and Robert H Boh from Tidewater at day rates reportedly at US$21,000–25,000.

Canadian junior explorer CGX Energy is waiting to take Japan Drilling’s recently delivered jack-up rig Hakuryu-12 on charter. The rig is currently chartered to Inpex for exploration drilling in Suriname. For this campaign in block 31, Inpex has brought in Bourbon Offshore vessels, said a broker. CGX recently announced an extension to the exploration period on the Corentyne block, which is adjacent to the Stabroek block. It has until October 2016 to complete the first well and November 2017 for another.

CGX chief executive Dewi Jones said the company was seeking financial partners and working on the technical data before proceeding with exploration wells. “We are currently investigating joint ventures to drill the next exploration well given the renewed interest in the Guyana-Suriname Basin. However, in the event we are not successful in attracting a suitable joint venture partner, we will seek alternative financing structures in order to drill the next well and meet our work commitments in Guyana,” he said.

Apart from the challenge of securing finance and partnerships, there is also political risk to consider. Neighbouring country Venezuela has demanded that Guyana halts oil exploration because of an ongoing offshore territory dispute. This is part of a long-running border dispute between the two countries covering the jungle area of Essequibo since 1899. Venezuela claims ExxonMobil’s oil discovery and CGX’s area are in the disputed territory. CGX co-chairman Suresh Narine said that the company does not view the border claims from Venezuela to have a material impact on its acreage offshore Guyana.

Over the past two decades, Venezuela offshore activity has been focused on oil in the Gulf of Paria, but around 10 years ago, state oil company Petróleos de Venezuela (PdVSA) transferred its focus to developing the large gas resources in the Gulf of Venezuela and on the territory close to Trinidad and Tobago, where BP and BG Group had long-term projects. In the Gulf of Venezuela, Repsol and Eni are developing South America’s largest offshore gas resource, the Perla gas and condensates field, which lies in water depths of 60m, 50km from the coast. The project involves installation of a series of small wellhead platforms and pipelines linked to an onshore processing plant. In June, the first phase of the project in the Cardon IV block started production.

Repsol has started tendering for two 90-tonne bollard pull anchor-handling tug/supply vessels to support ongoing drilling and development work on the Cardon IV block. Brokers said this could be to replace two vessels that it currently has on contract with Bumi Armada, which are thought to be Bumi Armada’s 2010-built 2,149gt Armada Tuah 84 and 2010-built 2,183gt Armada Tuah 85. Repsol is using Seadrill’s jack-up rig West Freedom for the development wells.

Seaway Heavy Lifting has been installing three gas platforms on the Perla project using its crane vessel Stanislav Yudin. These platforms are being linked to a shore terminal near Punto Fijo via a 30in diameter pipeline. Seaway’s contract includes installation of the platforms and the tie-in work. Prior to starting the contract, Stanislav Yudin was fitted with a saturation dive system to perform the pipeline tie-ins. It is supported by two supporting vessels and seven tug/barge spreads, which transport the platforms and subsea infrastructure from Gulf of Mexico ports to the site.

In the area north of the Perla peninsula and near Trinidad and Tobago waters, PdVSA was developing the gas fields as part of the Mariscal Sucre project. In 2012 and 2013, Saipem and Technip worked for PdVSA to install a platform and pipeline on the Dragon project. The Mariscal Sucre project includes four gas fields – Dragon, Patao, Mejillones and Rio Caribe. Venezuela also has an agreement with Trinidad and Tobago to jointly explore for gas in offshore areas close to the border as part of a much broader range of trade deals.

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