Paraguay

Bolivia and Argentina both produce from the same geological formations as exist in Paraguay. For over 70 years Argentina has produced oil and natural gas from the same geological formations that underlie the Paraguayan Pirity Basin. Oil is being produced in the Olmedo Basin of Argentina 3 km south of the border with Paraguay. Given the similar geological settings, and the fact that the bulk of the Paraguayan Pirity Basin is unexplored, the potential for large hydrocarbon reserves as exist in the neighboring countries would appear to be an excellent possibility. The Pirity Basin is a large sedimentary basin located predominantly in northestern Paraguay and northeastern Argentina. The Paraguayan Pirity Basin remains one of the world's last minimally explored onshore hydrocarbon areas. Reprocessed seismic data since 2001, recent concepts in seismic stratigraphy and the analysis and interpretation of multiple data bases from several previous operators allowed for positive revisions to the geological model and hydrocarbon assessment of the Paraguayan Pirity Basin. The revisions confirmed that five important aspects which are indicators of potential commercial hydrocarbons are present in the Paraguayan Pirity Basin. They are:

• adequate hydrocarbon sources;
• reservoirs;
• seals;
• trapping mechanisms, and;
• migration timing.

The recoverable potential in that area of the Paraguayan Pirity Basin located west of the current production in the Olmedo Basin has been estimated at more than 4 BBOE (billion barrels of oil equivalent). Several factors render the Paraguayan Pirity Basin attractive for hydrocarbon exploration and development. These include larger and growing markets for hydrocarbon products both domestic and for export to countries such as Brazil, Argentina, Chile and Uruguay, significantly increased oil and gas prices since the early 70's, improved infrastructure in the Olmedo and decades of exploration success and production from the Olmedo Basin which is regionally down dip of the Paraguayan Pirity Basin and a positive change in the political climate. Additionally, new production techniques in the US Permian Basin, the Canadian Montney area in Alberta and British Columbia and elsewhere demonstrate that formations having similar properties to those found in the Paraguayan Pirity Basin are commercially viable. Paraguay also has a favorable hydrocarbon law wherein concessions are granted and guaranteed by Congress. Tax laws for investment by foreigners offer benefits conducive to the high risk nature of oil and natural gas exploration and development.