Offshore Exploration in Mar del Plata
Offshore Exploration in Mar del Plata
Offshore in the Argentine Sea, a key resource to increase the country's energy exports
Welcome Avatar! After much debate from the usual members of the local Eco Taliban, the court gave oil companies the green light to start their activities for offshore drilling in the Argentine Sea. This will significantly impact Argentina’s energy landscape and could convert Argentina into one of the most important oil exporters in the region.
Overview
The Argentine offshore seabed is one of the most extensive and least explored spaces with hydrocarbon resource potential at a global level, which constitutes a unique opportunity for Argentina to attract more foreign investments.
After Vaca Muerta and Palermo Ike, it is one of Argentina’s most important oil and gas reserves to extend its energy horizon and accelerate energy independence in 2024.
The blocks included in Ronda 1 are located in the areas in the Austral Basin, West Malvinas and the northern sector of the Argentine Basin (see map).
In 2018 the Macri administration started giving out concessions for 13 areas of offshore exploration in the Ronda 1 area.
The winning bids, with an investment commitment for a total of US$ 724 million, were placed by the following companies: YPF, Qatar Petroleum, Equinor (former Statoil), ExxonMobil, Total, Shell, Pluspetrol, Tecpetrol, Wintershall, British Petroleum, Mitsui, ENI and Tullow.
The total of these 18 areas covers 201,104 km2:
Ronda 1: 100,171 km2 in 14 blocks in the Northern Argentine Basin (located off the coasts of the provinces of Buenos Aires and Río Negro, extending to the Lateral Maritime Limit between Argentina and Uruguay),
Ronda 2: 14,542 km2 in 6 blocks of the Austral Basin (located a few km east of Tierra del Fuego, where there are already offshore operations of Total Austral, a subsidiary of the French oil company Total)
Ronda 2: 86,391 km2 in 18 blocks of the West Malvinas Basin (located between 100 and 400 km offshore).
Near the end of his mandate in October 2019, former President Macri granted another five areas in concession, covering 27,801 km2 of the Argentine Sea.
Of the total of 23 areas, covering 228,905 km2, YPF participates in only three areas in a partnership with the Norwegian oil company Equinor (former Statoil).
Autist note: to read more about Argentina’s current energy potential, you can read the following articles with a deep dive on different areas and overall outlook:
Economic Potential
The potential of these resources cannot be understated: according to this outgoing government, the offshore deposits are equal to another Vaca Muerta.
Just the development of the Ronda 1 region could generate public income (royalties + taxes) of 32.9 billion dollars.
If these projects are successful, and the development is scaled to the North Sea Basin, potential income for Argentina would rise to 98.7 billion dollars.
In this TN article estimates range from an additional $2.5 billion USD per year in the worst case, and almost $20 billion USD in the best case scenario. This is all on top of existing onshore projects in Vaca Muerta and Palermo Ike.
GreenWars
Of course there is one type of green that ecologists aren’t particularly fond of when it is generated through resource extraction: the shades of green found on bills with dead presidents.
It didn’t take long for the eco fundamentalists to start raising the alarm bells about potential oil spills on the shores of Mar del Plata, ruining its tourism potential forever.
In 2020 the Alberto Fernández administration decreed a public hearing about the potential exploration of the Ronda 1 area, and most unions and politicians declared to be in favor of further exploration despite salty ecologist tears.
Besides oil spills, one of their main criticisms is around the seismic technologies used to find the oil and gas reserves, which in their view could cause a potential threat to marine life:
Oil companies use the technique known as seismic exploration to find oil on the seabed. According to the Greenpeace organization, which has been monitoring activities in the Argentine Sea for a long time, seismic exploration works by firing underwater shots with air cannons that create very loud noises, causing an impact on more than 300,000 km2, an area equivalent to the entire the province of Buenos Aires.
The sound waves from these shots travel to the ocean floor, are reflected, and are picked up by sensors towed behind the exploration vessel. The data collected is used to create detailed seafloor maps, which oil companies use to determine locations for drilling.
Rest assured that this is pseudoscience, and the installation of offshore wind turbines GreenWars advocates for should be a lot higher on their list in terms of cause for concern for marine and bird life.
As the Argentine Oil and Gas Institute put it:
“To talk about acoustic bombings, the end of life in the Argentine Sea and ‘100% possibilities of spills’ is pseudoscience, and only demonstrates the poor scientific technical level and the irresponsibility of those who disseminate this type of information”
As you can imagine, all this back and forth put some breaks on the exploration progress in the deposits located 200-300km outside of Mar del Plata.
Video: A 2021 protest against offshore drilling in Mar del Plata
A total of four lawsuits were filed before the federal Justice of Mar del Plata in an attempt to stop exploration — promoted by self-convened environmentalist organizations and the Greenpeace Argentina Foundation —, which resulted in a precautionary measure consisting of the immediate suspension of the project until a final ruling was issued.
This virtually implied the paralysis of offshore activity, with an uncertain outcome.
Green Light
Finally, in November of 2023, a resolution passed in Mar del Plata, rug pulling the environmental cause: the Court rejected environmentalists’ complaints and endorsed the exploration at 300km from the coast of Mar del Plata.
The Greenpeace Foundation led a series of extraordinary appeals that only ended up generating a delay in the completion of the project.
Now, after the Supreme Court ruling that rejected the last extraordinary appeals, the coast is clear for the Ronda 1 exploration.
Current Projects
Offshore drilling is not new for Argentina. From the 1960s to today, more than 400,000 kilometers of 2D and 3D seismic exploration were recorded, and more than 400 wells were drilled in the Argentine Sea.
For example, the Austral Basin (Tierra del Fuego and south of Santa Cruz) has had gas production in offshore wells for decades: 17% of the gas produced today in Argentina comes from 36 operating wells in the sea.
For Argentina, drilling more in the southern part of the Argentine Sea is also important from a geopolitical perspective, as an ex-energy secretary explains:
“The geostrategic value of off shore exploration is twofold. On the one hand, it helps strengthen the national claim in the sovereignty dispute over the Malvinas Islands, which our country has maintained in international forums since the illegitimate usurpation of the United Kingdom in 1833.”
As far as the offshore projects in Mar del Plata, we will finally see more exploration progress in the upcoming months.
The drilling of the first offshore hydrocarbon well in the Northern Basin of the Argentine Sea and the discovery of conventional oil will open the opportunity to generate investments of at least $40 billion dollars and employment creation for 125,000 workers for the sector in the next three decades.
See you in the Jungle, anon!