TNK-BP Says HRT to Drill in Areas of Amazon in 2013

Source: Reuters 9/27/2012, Location: South America

HRT Participacoes em Petroleo , whose share price fell when its first Amazon exploration wells turned up gas instead of oil, will start drilling next year in areas where it expects to find liquids, its Russian partner TNK-BP said.

TNK-BP paid $1 billion in October 2011 for a 45 percent stake in 21 Amazon exploration blocks. The Rio de Janeiro-based startup's shares plunged 19 percent in a single day in May after early drilling results revealed more gas than oil. The exploration project in the Solitons basin is cut off from major gas markets, though HRT has said it will find a buyer for the gas by end-2013. Six of nine wells drilled so far showed commercial gas reserves. Three of five exploration wells planned for 2013 are in the "frontier areas" in the south and east of CRT's license area, where no seismic data is available but oil finds are seen as likely, a TNK-BP executive said.

"The frontier areas are where we expect to find more oil-prone areas so drilling I think will determine whether this basin is oil or gas," Chris Einchcomb, senior vice president for exploration at TNK-BP, told a news conference at TNK-BP's Moscow headquarters.

Two further wells are planned to the north, with potential for oil rather than gas.

"Tucuma is on the border so we suspect we will find gas as well as liquids there but when you get to Cajazeira then it is more oil," Einchcomb said.

TNK-BP is a likely takeover target for Russia's Rosneft, which has said it would like to buy out BP's 50 percent of the company and sell it a minority stake in the state company, though BP's partners, a quartet of Soviet-born billionaires, have also said they would bid for BP's stake. Russia's No. 3 oil producer started expanding outside Russia's borders in the past two years, buying assets in Venezuela, Vietnam and Brazil and branching out from declining Soviet-era fields in Western Siberia.

One of its Venezuela projects, the Junin 6 block in the Orinoco belt, a joint venture with Venezuela's PDVSA and four other Russian oil companies, launched production on Thursday, targeting 50,000 barrels per day this year. It is considering other plays in Latin America. Einchcomb said it had registered for a licence round in Colombia this year but decided against participation.

HRT Chief Executive Marcio Melo has promised to secure an outlet for the gas by the end of 2013, either by selling it for power generation or as feedstock for fertiliser or alternative fuel production.

Einchcomb said among the options under consideration, the gas could be used to produce 20,000-30,000 barrels per day of ethanol at the field with new gas-to-liquids technology, and the ethanol shipped by barge to Petrobras refineries. A study on the gas options is due for completion by the end of March 2013, he said.


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