Despite takeovers, Total seeks Uruguay oil

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MONTEVIDEO, Uruguay, May 11 (UPI) -- Despite what the energy industry sees as takeover mania in Latin America, France's Total is pitching for new oil in Uruguay even as news from Argentina and Bolivia continues to rattle energy investors in the region.

Argentina ratcheted up a political row with Spain over its confiscation of oil producer and distributor YPF, majority-owned by Repsol, and Bolivia sent mixed signals to the market by taking over the local power transmission unit of Spain's Red Electrica Espanola but pledging fair compensation.

Uruguay backed Argentina's nationalization but then went low-key over its comments, reminded of risks to the country's own sovereign credit rating, foreign investment prospects and political and trade fallout.

Argentina is awaiting U.S. and European backlash on its preferential trade privileges and will likely lose both, the result of U.S. and EU response to the YPF takeover but also -- in the case of the U.S. decision -- as punishment for failing to settle debts since its 2002 sovereign default.

So far Brazil is the leading emerging market in Latin America to have furnished for investors assurances that their capital will be safe in an increasingly transparent economic environment in that country.

Energy analysts see the South Atlantic region emerging as a potential challenge to the Middle East and a new oil province with its own rising consumption and proximity to huge markets in the United States, Canada and the Caribbean.

The Falklands oil exploration received a new boost this week with the potential entry of an Indian oil firm, the first non-British participant, in its exploration program. India's Oil and Natural Gas Corp. is reported in talks to buy a 25 percent stake in an exploration block in the Falklands' South Atlantic waters.

OVL has operations in Brazil, Colombia, Cuba and Venezuela. The Falklands have also drawn interest from U.S. oil firms.

Total's new deal in Uruguay will give the French multinational exploration rights for block 14 offshore Uruguay. Total was the only bidder to propose to drill one exploratory well in the 2,583-square-mile part of the Pelotas basin, 135 miles offshore, said the company.

Total Senior Vice President Marc Blaizot described the bidding process as very competitive in terms of the proposed work program and financial commitment.

The deepwater Pelotas basin lies along Uruguay's marine boundary with Brazil, but about 650 miles southwest of the Santos basin where Brazilian oil giant Petrobras has discovered major pre-salt oil resources.

Blaizot said the Uruguay project would build on recent expansion with new exploration licenses in Africa, including Angola, Kenya, Ivory Coast and Mauritania. Total is also expanding exploration and production projects in Argentina, Bolivia and Brazil.

Other successful bidders in 30-year exploration and production contracts in Uruguay include the BG Group on blocks 8, 9, and 13, BP PLC on blocks 6, 11, and 12, and Tullow Oil PLC on Block 15.

Chile is building on its energy program and, given its free market policies and interconnectivity with international markets, has not had to give assurance to investors fearful of nationalization.