Oil found in Uruguay

Executives at state-owned ANCAP told Efe Thursday that the company had discovered the first traces of oil in Uruguay, a country that depends on imported crude for 60 percent of its energy.

“For the first time in Uruguay’s history, free oil has been found in small proportions, emanating from the bedrock,” Juan Gomez, member of ANCAP’s board of directors, said in an interview.

He added, however, that only traces of oil were found. “They’re not deposits strictly speaking; it’s not as though oil is gushing out.”

The find was made in the subsoil of the central province of Durazno following exploratory drilling at a depth of 180 meters (590 feet) by U.S.-based Chesapeake Energy Corporation, which was awarded a subcontracting license from the Uruguayan government in 2009.

The material was discovered “in rock that is from the … Upper Devonian epoch,” which dates back about 365 million years, Gomez said.

Those geological characteristics have sparked optimism because oil has been found in that same type of rock “in other countries of the Americas.”

The most important thing, the executive said, is that the find is “not the result of contamination by some other product.”

“It’s a very interesting find because it’s going to allow us to keep working and go deeper in searching the bedrock to see if there are significant quantities of oil. But as to whether the oil exists, it does,” he said.

Future work will enable the company “to learn with greater precision what amount of organic matter the bedrock contains” and what type of crude is in the subsoil.

The discovery is the result of oil exploration efforts by Uruguay that date back decades but which have intensified in recent years – both offshore in the so-called Oceanic Platform, and onshore.

Two years ago, two blocks were awarded in the Oceanic Platform to a consortium made up of Brazilian state-controlled energy giant Petrobras, Argentina’s YPF and Portugal’s Galp Energia.

“Work will intensify this year in that platform with the awarding of several new blocks,” Gomez said.

YPF and Royal Dutch Shell, meanwhile, have informed ANCAP of their interest in carrying out onshore exploration work.

According to Gomez, Uruguay’s energy policy is “very ambitious’ and is aimed at reducing the country’s dependence on imported oil.

“We are aspiring (to reduce dependence on imported oil from 60 percent to 40 percent) and replace that 20 percent with renewable energy” such as biomass, wind power, solar energy and biofuels, but also more natural gas, Gomez said.

Natural gas currently accounts for 1 percent of the South American country’s energy consumption and is imported from neighboring Argentina.

Uruguay currently imports oil from Venezuela, Ecuador and Iran.