The Service Contract for the exploration and development of hydrocarbons on the Azero block was signed in Bolivia

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.

Bolivia occupies a leading place in Latin America in its natural gas reserves, which comprise here about 565 billion cubic metres (281 billion m2 of them have already been proven).

Currently Gazprom International (the sole operator of Gazprom in the area of prospecting, exploration and development of hydrocarbon deposits outside the Russian Federation) is involved in two projects in Bolivia: the Ipati and Aquio blocks, and the Azero block.

In September of 2008, Gazprom, Total and YPFB signed a memorandum of understanding on joint work on the Azero block. Negotiations on the terms of a service contract to provide services for exploration and extraction on this block, as well as agreeing the articles of association for the future Joint Venture, were completed in 2012.

In September 2010 agreements were signed for the concession of a part of Total E&P Bolivie’s stake in the Ipati and Aquio blocks project in favour of Gazprom International. In May 2013 the procedure for confirming the agreements for the concession by the state bodies of Bolivia was completed. The share of Gazprom International in the project amounted to 20%, Total 60% and a third participant – the Argentinian Tecpetrol – also received 20%.

The project is currently being actively implemented. Total, the project’s operator, has announced the commercial opening of the Incahuasi gas field. It is to be commissioned in 2015.