Sizing up Bolivia

Bolivia

TOGY talks to Jorge Urcullo, General Manager at SAExploration, about the company’s activities in Bolivia, its physical and regulatory challenges and the major differences between public and private contracts there. SAExploration is an international oilfield services company, headquartered in Houston, Texas. The company’s Bolivian operation has 40 permanent employees with a workforce of around 2,200 deployed on a project-by-project basis. In October 2016, the company completed a project for BG Group (since acquired by Shell) it had been awarded in December 2015.

What was the value of the BG Group (Shell) contract?
The contract was worth around USD 60 million-70 million. We had 1,800 staff in a very complex area. It was a great challenge because BG Group had stringent safety requirements to comply with. We ended up getting Shell’s safety award, the Golden Helmet. This was BG Group’s biggest project after Australia.

Can you discuss your current developments?
We are running logistics services for Schlumberger and a magnetotelluric acquisition for Total. It is a small contract.
We are also taking part in a bidding process for the Andina license [valued at around] USD 60 million. There are also two YPFB [Yacimientos Petrolíferos Fiscales Bolivianos] projects worth USD 40 million and USD 20 million, as well as a small USD 3-million project in Santa Cruz this year.

What is the capacity of the Bolivian sector to implement technologies like the wireless logging system used on the Repsol contract?
We implemented the wireless system and the electronic detonators for the first time in Bolivian history. There is openness in the private sector, but YPFB is less trusting. Nevertheless, the failure rate of these channels is really low, around 0.5%. This is a competitive edge. It makes sense to do 3D imaging with this wireless system because such a project is more economical and it runs faster than other methods. You can minimise possible failures such as wind control.

What developments is SAExploration most excited about as it enters 2017?
[YPFB] Andina is a big, juicy project. Opportunities are opening up for magnetotelluric projects. This is in logistics. In seismic, YPFB is going to do four to five projects, but they have more in their portfolio. The Caipipendi [development] from Repsol is next year and we expect to participate in that project.
I do not see any more activity in the private sector. Petrobras is stalled for now, though Total may be conducting seismic [surveys] next year. Total and Petrobras have just signed exploration contracts. This might change things, but so far YPFB is the only one generating projects at great speed.

Can you comment on the differences in bidding processes between YPFB and private operators in the Bolivia’s hydrocarbons industry?
There are subtle differences. Private companies require much more in-depth assessments. With YPFB, they just look at prices and tend to forsake quality. We have a saying: the most expensive seismic is the one that does not yield results. Perhaps this is not being considered, as well as the industry safety requirements at international levels.
YPFB is mixed up with politics and therefore we have to coexist with its lack of flexibility, but we are trying to work with them. We already did a small job for the NOC, starting with work for YPFB [itself], and ending with work for YPFB Chaco.

What is the competition like in Bolivia in the seismic sector at this moment?
Those companies firmly in place are Sinopec and BGP. Some satellite companies are trying to enter, but these two and SAExploration are the ones with experience in Bolivia. We have performed the most complex projects.

What advantages and experience from your regional presence in Peru and Colombia can you bring to Bolivia to add leverage over your competitors?
Some 90% of the people we started SAExploration with came from another company, Veritas, with a lot of experience and a way to perform seismic that we have brought to Bolivia. Our main concern is data quality and safety: we walk our talk and we finish our projects properly.

At an operational level, safety measures in Bolivia and the number of indigenous communities pose a challenge. What do you think are the most important challenges in those areas compared to the region as a whole for seismic companies?
In Peru, reaching the project site is the most difficult part. We required 60 mountaineers familiar with complex safety procedures. Regarding communities, it is manageable but you need to know the terrain.
This is a new Bolivia and it is totally different. Communities are more empowered and aware of their rights, though they try to abuse them sometimes. We have to respect and understand them. We have great relationships and some workers keep working with us throughout different projects after the first one. They started as workers and now they have become specialists.

Regarding environmental regulations, do you find any significant obstacles with environmental regulations?
One permit took 15 months to be issued, although YPFB gets theirs more quickly. Within the regulations for seismic, there is a lot of copy and paste. Things that do not apply need to be revised at a round table for environmental issues. For example, moving equipment within a 1 kilometre radius requires a special technical report that takes a month to compile. In theory, you could not operate while this is being processed. If you want to move farther than 1 kilometre, the report takes five months. This would invalidate many seismic projects.

What is the weight of Bolivia for SAExploration in the region?
With the oil price low, Bolivia is a market with great prospects. It is an important market for SAExploration. There are very large projects, although they tend to be cyclic.

What do you hope to accomplish over the next 12 months? What changes do you think will happen?
We aim to keep growing and strengthening our presence in Bolivia. We have consolidated SAExploration as one of the most important seismic companies so our weight is considerable. Many have trained with us and are now working with the competition. This is how experience gets passed on from company to company ultimately benefitting the country as a whole.
Since Bolivia needs to keep selling gas, we think it will have to intensify exploratory activity with better planning and a more aggressive programme where the private sector will need to take part or Bolivia will run into problems complying with its supply contracts. The government is lacking the mechanism to step from talk to action. An incentives programme would activate things. Bolivia is still attractive for all of us though, even with its flaws.

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