Gazprom Inks E&P; Service Contract For Azero Block in Bolivia

August 2, 2013

On 1 August, in the capital of Bolivia, La Paz, a Service Contract for the exploration and development of hydrocarbons on the Azero block between Gazprom International, Total E&P Bolivie and the Bolivian state oil and gas company YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) was signed, Gazprom International reported in a news release.

The contract signing ceremony took place in the Presidential Palace in the presence of Evo Morales, the President of Bolivia, and Juan Jose Sosa, the Minister of Hydrocarbons and Energy. The document was signed by Carlos Villegas, the Executive President of YPFB, Vladimir Burdakov, the General Manager of the Bolivian branch of Gazprom International, and Jose Ignacio Sanz, the General Manager of Total E&P Bolivie. The event was also attended by representatives of Total S.A, as well as the diplomatic missions of Russia and France in Bolivia.

The Azero block is situated in the south-east of Bolivia and is one of the largest (7,856 km2) non-licensed potential sites in the country.  The contract is for 40 years, of which 5 years are allocated to geological exploration. Under the terms of the contract, the minimum amount of geological exploration work on the block provides for magnetotellurgic surveys and gravimetric prospecting to an extent of 200 linear kilometres, and the drilling of two prospecting wells. The minimum amount of investment at the first stage of geological exploration amounts to 130 million dollars.

Funding of the project at the geological exploration stage will be done on a parity basis by Gazprom International and Total E&P Bolivie. In the event of a commercial discovery a tri-partite Joint Venture will be formed, in which Gazprom International and Total E&P Bolivie will each own 22.5% and YPFB 55%.

The head of YPFB, Carlos Villegas, highly praised the preparatory work done by all the parties in the project. Commenting on the agreements reached, he said: ‘Bolivia is interested in the speedy implementation of a whole number of major oil and gas projects, including the project for development of the Azero block.  And we are sincerely glad to see one of the world’s major energy companies – Gazprom of Russia – as one of the active players in the Bolivian oil and gas sector.’

Vladimir Burdakov and Jose Ignacio Sanz noted in their comments the positive experience of cooperation in Bolivia, where Gazprom International and Total E&P Bolivie are also working together on the Ipati and Aquio blocks.

‘We consider that the signing today of the Service Contract for the Azero block will open a new page in our cooperation with Bolivia, which recently has been developing at an ever increasing pace. Apart from the Azero contract, “Gazprom” recently entered the “Ipati-Aquio” project. We are sure that our cooperation with YPFB and Total as part of this contract will be very productive, and will develop successfully in the future, making use of the experience we have gained,’ Vladimir Burdakov stressed.

Source: Gazprom International, 2013.