On March 12, 2019, the Ecuadorian Ministry of Energy and Non-Renewable Natural Resources accepted bids from qualified companies participating in XII Ronda Petrolera Intracampos. The ministry televised the reception and public opening of the offers for the eight Oriente-Maranon Basin blocks that will operate under a Production Sharing Contract (PSC).
While winners have yet to be announced, a roster of preliminary victors has emerged based on proposed shares of gross production and minimum exploration programs.
Ecuador’s Vice Minister of Hydrocarbon, Patricio Larrea said, “On April 2, 2019, the Evaluation Committee will present results from the bidding to the Hydrocarbons Licensing Committee. Following that, a decision will be announced with final contracts scheduled to be signed on May 9.” The government is hoping that Quito – on average – will walk away with a 60 percent share in future production.
Colombia-focused Gran Tierra and the Frontera Energy and GeoPark consortium were the most aggressive bidders at the event. Block 88 (Perico) saw some of the hottest bidding, but the Frontera-GeoPark consortium emerged as the preliminary winner for Block 88 (Perico), as well as for Block 92 (Espejo).
“This successful Ecuador bid extends and consolidates Frontera’s position in the North Andean region of South America. We are pleased to be partnered with GeoPark, which has significant oil and gas experience and operations throughout South America,” said Frontera CEO Richard Herbert. The Block 88 (Perico) exploration work commitments include the drilling of four wells, 72 sq km of 3D seismic reprocessing and 72 km sq of magnetometry and gravimetry, as well as a surface geochemical program.
As for Block 92 (Espejo), the other Frontera and GeoPark block, the exploration work commitments include the drilling of four wells, a 3D seismic acquisition program covering 55 sq km, and 74 sq km of 3D seismic reprocessing. The program also includes 63 sq km of magnetometry and gravimetry work and a surface geochemical program.
Block 50 (Charapa), had the Frontera and GeoPark consortium squared off against Gran Tierra, which saw the latter scooping up the block. After the round, Gran Tierra touted the fact that it has added three Ecuadorean blocks – Block 50 (Charapa), Block 51 (Chanangue), and Block 89 (Iguana) – to its portfolio. “Based on preliminary results, the company has made a new-country entry into Ecuador through the submission of winning bids for a total of three blocks,” a Gran Tierra spokesperson said.
The three blocks encompass 140,000 acres in total area, creating a contiguous acreage position extending from Gran Tierra’s existing assets in the Putumayo Basin in Colombia. These Colombian blocks include PUT-7 and Suroriente. Final award of these blocks is contingent upon regulatory approvals and the execution of the participation contracts.
The work program includes the drilling of 14 exploration wells over a four-year period. Gran Tierra’s share of revenues is tied to the Oriente Blend Oil Price and to production volumes. The contracts are on a sliding scale, with the company take ranging from 87.5 percent at US$ 30 per barrel to 40 percent at US$ 120 per barrel.
Meanwhile, U.S. based Flamingo Operating has the preliminary win for Block 90 (Sahino) while Petrosud’s Ecuadorian subsidiary Petrolamerec edged in for Block 91 (Arazá Este). No bids were submitted for Block 93 (Panayacu Norte). Russian Zarubezhneft and Uruguayan Petrobell are thought to have been unsuccessful with their bids.
Only seven companies participated in the bidding. In all, 19 companies had qualified, 13 of which qualified as operators, and six as participants. Minister of Energy and Natural Resources Non-Renewable, Carlos Perez, said the minimum work commitments on the block entail up to US$ 700 million. It was hoped that investments would reach up to US$ 1 billion.
An official announcement, released by the Ecuadorian Ministry of Energy and Non-Renewable Natural Resources on February 15, 2019, listed the qualified companies to take part in XII Ronda Petrolera Intracampos. The 13 qualified operators were:
- GeoPark Peru S.A.C.
- Gran Tierra Energy Colombia LLC
- Frontera Energy Colombia Corp
- Amerisur Exploracion Colombia Limited
- Zarubezhneft JSC
- Andes Petroleum Ecuador Ltd
- Tecpecuador S.A.
- Orionoil ER S.A.
- Petroleos Sud Americanos Del Ecuador Petrolamerec S.A.
- Petrobell S.A.
- Madalena Energy Arg.entina S.R.L.
- Repsol Ecuador S.A.
- Flamingo Operating LLC
The 6 qualified participants were:
- Cobra Instalaciones Y Servicios S.A.
- Hupecol Operating Co LLC
- Sertecpet S.A.
- Madalena Ennergy Inc
- Kempton Invest S.L.
- Amerisurexplor S.A.
While a number of these companies already operate within Ecuador, such as Repsol, Petrobell, Petrosud, and Andes Petroleum, for most companies in the list, this is their first foray into the Andean nation. Traditionally Colombian-focused companies, such as Gran Tierra, Frontera Energy, and Amerisur, have taken some interest in Ecuador, as well as GeoPark, which already operates in five other South American countries.
Preparation and delivery of tenders were due on March 12, 2019, having been extended from February 22, 2019. Contracts will be signed between April 9 and May 9 of this year. For more information on XII Ronda Petrolera Intracampos see the website set up for the round https://www.rondaspetrolerasecuador.gob.ec/.
The Roadshow presentations and data rooms kicked off at the St. Regis Hotel in Houston September 25-27, 2018, with the Ecuadorian Ministry of Hydrocarbons revealing that 33 international companies, 17 of which are operators, showed an interest. Ecuador is hoping the round will help revitalize the country’s E&P sector. The eight blocks are all low-risk exploratory blocks located close to established fields and have 15 exploration opportunities or prospects and two existing fields, according to the Ministry of Energy and Non-Renewable Natural Resources. The blocks are offered under a new contract model to attract investment in the country. The eight blocks that are offered are:
- Block 50 – Charapa (243.52 sq km)
- Block 51 – Chanangue (202.76 sq km)
- Block 88 – Perico (71.7 sq km)
- Block 89 – Iguana (149.24 sq km)
- Block 90 – Sahino (98.97 sq km)
- Block 91 – Arazá Este (55.07 sq km)
- Block 92 – Espejo (63.34 sq km)
- Block 93 – Panayacu Norte (92.28 sq km)
The blocks on offer are carved out of state-owned Petroamazonas acreage. The government expected around US$ 1 billion in additional investments. The Hydrocarbons Secretariat estimates original oil in place for the blocks to be 854 MMbo and recoverable resources of 170 MMbo assuming a recovery factor of 20 percent (validated by Ryder Scott).
Blocks are offered in Ronda Intracampos under a ‘Participation’ contract, which is a Production Sharing Contract (PSC) type model, rather than the service contract model previously employed in Ecuador. Bids in Ronda Intracampos will be evaluated primarily on the production sharing commitment offered to the government (government share of production before taxes), but also on the total exploration investment committed (annual work commitment plans).