Despite its long oil history, Peru still has a lot of acreage that’s yet to be explored.

However, when crude oil prices are low, attracting investment for projects in areas that lack in-depth geological knowledge or are difficult to access is a tremendous challenge for any promotion agency.

As a general rule, when prices are low, most oil companies reduce their appetite for risk. Instead, they prefer to bet on highly prospective assets, with short-term secured returns.

Faced with this reality, Perupetro decided to drive new models of technical evaluation agreements (TEAs) in 2017.

The big selling point: Subject to performing a comprehensive geological-geophysical assessment, participating oil companies get the exclusive preferential right to directly negotiate a long-term license contract (i.e., a concession) with Perupetro over the area under evaluation. Depending on the work programme, the TEAs may last for up to two years.

Perupetro hopes that these TEAs will encourage organisations to explore potential frontiers as well as semi-explored areas reducing geological risk.

Its also inviting prospective counterparties to carry out studies, works and activities using non-intrusive geophysical methods—like aerogravimetry, aero-magnetometry, geochemistry, geology, cartography, photogeology, field geology, sampling, geochemical analysis and, in general, surface prospecting activities.

What’s more, Perupetro is encouraging geological-geophysical reassessment of the information placed in its data bank—with an emphasis on seismic reprocessing and licensing existing multi-client data.

During the agreement, if a company decides to exercise its preferential rights and all agreed conditions are met, negotiations over the license contract may start over the ensuring next few weeks. These negotiations will pay particular attention to the activities and periods that are to be included in the minimum work programme.

It is important to note that, since 2017, Perupetro has signed nine TEAs and 11 TEA contracts, which have boosted exploration initiatives in the region.

Both medium and large oil companies have shown interest in this contracting model. These include Repsol, which has signed six TEA contracts to date, many of which cover the Pisco Basin; Hunt Oil has been assessing the Ucayali Basin under three TEA contracts; and, more recently, YPF of Argentina signed a TEA to study an area in the Huallaga Basin, as well as a separate TEA contract to assess an area in Marañon.

What’s more, after exercising its preferential right for negotiation last year, CEPSA reached an agreement with Perupetro for a license contract over Block 200.

As you can see, thanks to the TEAs, Perupetro is securing the active assessment of frontier and semi-explored areas and nourishing its data bank with modern data and interpretations.

As the strategy continues to bear fruit, the Peruvian promotion agency expects to start additional negotiations over multiple long-term contracts in the near future.