Paraguay jumps the gun with oil strike announcement
Paraguayan President Federico Franco last week announced his country had found oil close to the border with Argentina. … Franco seems to have been grandstanding and his comments look well off the mark. The Pirity Basin is believed to have potential as an oil producer, but there has been no drilling in the area since 1987. … Vicente Brunetti, a consultant based in Paraguay who has written reports for the United Nations in the past, told LatAmOil that the announcement was a poor misjudgement by Franco. “The announcement is a joke,” Brunetti said. “It’s based on exploration that was done 30 to 35 years ago. This didn’t happen yesterday.” Oil companies on the ground were quick to clarify the situation as well. UK-based President Energy, which operates in Paraguay’s arid Chaco region where the oil was allegedly discovered, responded to Franco’s announcement with caution. “I think the president is saying this with a lot of optimism and I wish it were so,” said Patricia Macchi, a spokesperson for President Energy, in a radio interview last week. “We’re just starting and there’s a long road ahead.” … Junior Energy Minister Hugo Cacace was more cautious in his choice of words than the president. “There are just traces of oil in the Chaco,” said Cacace in a radio interview. “We need to move forward with drilling to see if those traces are enough to produce oil. We know it exists and the expectations are high.” … The country has so far failed to generate any significant interest in its oil and gas reserves, which has led the government to draw up a favourable contract scheme for international oil companies (IOCs) that are willing to invest there. It has a sliding scale royalty system with a ceiling rate of 14%, and a 10% corporate tax rate. The Carmen, Los Naranjos and Jurumi plays in the Pirity Basin are believed to be the most promising in the country, although there is also growing interest in shale gas plays that could draw in greater investment.