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Today, dozens of small, international oil companies are exploring Paraguay, and each is enthusiastic about their chances of success. Activity is picking up, seismic companies have moved in, and a few companies seem set to drill as early as next year. Should oil be found, an attractive royalty scheme is in place, and beyond domestic demand of 28,000b/d, energy is in high demand in neighboring countries. Could Paraguay become the next great hydrocarbons province in Latin America? Many, including the country's president, seem to think so. But speculators have proclaimed Paraguay's oil riches since the bloody Chaco War from 1932 to 1935 and so far nothing has materialized. Why should anyone believe now is different? This report provides insight into the search for hydrocarbons in Paraguay, and assesses the potential for production, and the challenges that might delay its achievement.
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A potential energy powerhouse?
Paraguays oil and gas needs are relatively small at around 28,000 b/d of refined products, but satisfying domestic consumption is not the only aim of those conducting E&P in the country, especially with some estimates pointing to more than 4 billion barrels of oil equivalent in the Chaco region alone. Energy-hungry neighbors Argentina, Chile and Brazil would seem logical end-markets.
Many experienced professionals view Paraguay with similar enthusiasm to Argentina and Brazil thanks to political stability, robust economic growth and the recent change of government. Now there is plenty of activity, oil and seismic companies are moving in and there is vibrancy in the oil and gas sector, as well as in the government and regulatory sector.
In the past, companies have come close to finding hydrocarbons, only to be hindered by a lack of finance. Because of the logistical challenges in Paraguay, the cost of drilling a solitary well is very high, but firms are better prepared financially than in the past.
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