New Zealand’s Greymouth Petroleum Holdings Ltd has charged into South American oil exploration with a hiss and a roar, taking the most exploration blocks in Chile’s Magallanes petroleum permit round.

Greymouth acquired permits for four of the five blocks on which it bid in Magallanes Basin and committed sto pend $US107 million ($NZ143 million) in three exploration phases, Business News Americas reported.

It has rights in the Brotula and Isla Magdalena offshore blocks and the Provenir, Caupolican onshore blocks. The Caupolican block will be jointly explored and developed with Chilean state oil and gas company Empresa Nacional del Petroleo (Enap), which will retain a 50 percent stake.

The New Zealand company unsuccessfully bid for the onshore and offshore Otway block — regarded as having the most potential of the 10 opened up for bids — but was beaten out by French oil major Total, which will invest $US44.5 million in exploration.

The geological region near the Straits of Magellan has similarities with New Zealand’s Taranaki Basin, and Greymouth has identified gas and oil potential in the area equivalent to NZ’s Turangi-Pohokura gas-condensate area. Its five bids were for a total of 14,900 sq km, nearly half the area up for grabs.

Greymouth is the second largest oil and gas producer in New Zealand with an average daily production of 3000 barrels of oil equivalent.

According to Greymouth’s Chilean representative, Alberto Harambour, the company is pursuing opportunities in Chile while considering expansion into other parts of Latin America.

“Most of the blocks have the potential for moderate success,” he said.

Chilean mining minister Karen Poniachik said nine of the 10 oil and gas exploration and production contracts attracted bids totalling a minimum $US267 million investment. One didn’t receive any bids, but Ms Poniachik didn’t rule out launching a new tender for that block.

Greymouth will sign special operating contracts with the Chilean Government that will run up to 35 years, including a maximum 25-year production phase.

The first phase of exploration will begin immediately after contracts are formally signed in December and last for 36 months. The second and third phases will last for 24 months each.

Greymouth and the other companies have each promised to begin exploration within six months of signing the contract, Ms Poniachik said.

“They’ll begin exploring immediately after the contracts are signed in December … they’ll want to take advantage of the warm summer weather”.

Ms Poniachik said the tender for the oil and gas blocks was part of the government’s effort to diversify its energy sources after Argentina reduced its natural gas exports to Chile in 2004.

Chile currently imports 98 percent of its crude oil, 96 percent of its coal and 75 percent of its natural gas.

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