Offshore Argentina in the South Atlantic Margin is one of the least explored oil frontiers in South America. The South Atlantic Margin comprises three main areas of which two have had some exploration activity – the North Atlantic covering offshore Guyana-Suriname and the Brazilian Atlantic covering offshore Brazil and offshore Northern Uruguay.
In October 2018, after nearly three decades, the Federal Government of Argentina called for bids to award exploration permits over offshore blocks, called Offshore Round 1. The auction will comprise of thirty eight blocks, covering shallow and deepwater, totaling approximately 240,000 square kilometers (sq.km) in three areas: 5,000sq.km in the Austral Basin, 80,000sq.km in the Malvinas Oeste and 170,000sq.km in the Argentina Norte. The offer for each block will have to include a minimum number of working program units, depending on the size and available information on the block.
Of the offered areas, only Austral Basin has been explored. It is expected that the main commodity focus will be oil and companies will particularly be looking at the blocks in the deepwater Malvinas Oeste Basin, where one discovery has already been made. The Argentina Norte Basin, located in the most eastern part of the Colorado and Salado Basins, has not been explored.
Although offshore exploration is risky due to its required high capital expenditures and long lead time to discoveries, the current auction offers opportunities for major oil companies, due to the large block size and low upfront entry cost. As seen in other countries such as Brazil, Guyana and Mexico that have been able to attract investment from major oil companies, the same level of investment is also expected in Argentina from the majors. In short term the round will minimally impact Argentina’s oil industry and the international oil and gas supply. However, if in medium term major discoveries are made, the round will have the potential to change the outlook of the country by diversifying Argentina hydrocarbon outlook as seen in Brazil and Guyana.