A new agreement between Argentina’s state-owned YPF and Italy’s Eni to explore Uruguay’s offshore block OFF-5 sparked excitement Tuesday, marking a milestone that could reshape the Southern Cone’s energy outlook if drilling leads to a commercial discovery. The partnership between the two companies opens a wide range of opportunities in an area considered highly prospective, largely because of promising geological parallels across the Atlantic.
Major discoveries in recent decades offshore Namibia, Angola and Brazil have renewed global majors’ interest in frontier deepwater plays. A potential find in Uruguay’s marine platform could be a game changer: It would help confirm geological similarities between Africa’s Atlantic margin — off Namibia and Angola — and South America’s — off Uruguay and Argentina. That would significantly cut exploration uncertainty in Argentina’s adjacent Northern Argentina Basin (known by its Spanish acronym, CAN), where YPF is a key player.
Such a result could allow YPF to accelerate investment and move forward with new wells offshore Argentina, where the company currently holds six exploratory blocks.
Namibia: a history of “geologic patience”
The development of the Orange Basin is a story of persistence and what many call “geologic patience,” spanning decades of dry holes before any breakthrough. Through the 1990s and 2000s, the region was considered a geological desert with limited potential. Chevron, Norsk Hydro and others drilled there with no commercial success, prompting most majors to pull out.
The main challenge was identifying effective traps and reservoirs in an ultra-deep passive margin. A turning point emerged in the late 2000s and early 2010s, when Brazil-based HRT and other deepwater-focused companies launched new 3D seismic programs with higher resolution. Those surveys helped map deeper, more complex geologic structures and better understand the basin’s working petroleum systems.
The real inflection arrived in the 2020s, driven by improved ultradeep drilling technology and new interpretations of seismic data. TotalEnergies and Shell led the new exploration phase. Shell’s Graff-1 discovery in early 2022, followed soon by TotalEnergies’ giant Venus-1 find, changed industry perception overnight.
The two discoveries, estimated to hold billions of barrels in resources, confirmed the Orange Basin had high-quality source rocks, reservoirs and traps, validating ultradeepwater exploration. Risk collapsed, and interest surged.
After those breakthroughs, Namibia’s competitive landscape shifted quickly. Portugal’s Galp extended the proven play northward with its Mopane discovery in 2024. Chevron, Rhino Resources and Woodside Energy have since acquired blocks, hoping to mirror the pioneers’ successes. The pace of activity, moving from the first discovery in 2022 to a third major find in 2024, underscores the enormous potential and the maturity of modern offshore technology.
Argentina and Uruguay: emerging offshore players?
Like Namibia in the 1990s and 2000s, Argentina and Uruguay’s offshore margins have historically produced mixed results. Argentina’s Argerich-1 exploration well stands as a key learning milestone, similar to Namibia’s early, noncommercial wells that nonetheless unlocked new geological interpretations. Drilled by Equinor and partners about 193 miles (311 kilometers) offshore Mar del Plata, Argerich-1 was Argentina’s first ultradeepwater well. Despite being a dry hole, the geological data obtained is considered invaluable.
The driving belief behind current investment in the CAN blocks, including CAN-100, and Uruguay’s OFF-5 is that the same formations hosting the Orange Basin’s massive Venus and Graff fields extend across the Atlantic rift that once formed the supercontinent Gondwana, linking Uruguay’s Punta del Este Basin and the Northern Argentina Basin.
YPF’s partnership with Eni in Uruguay, along with the presence of Equinor and Shell, mirrors the pattern seen in Namibia: majors with the capital and experience needed to handle high-risk ultradeep exploration entering early. If exploration in Uruguay’s OFF-5 succeeds, it could act as a “South American Graff-1,” immediately reducing risk for Argentina and triggering a second wave of global interest and licensing, just as Namibia experienced.
To become heavyweight offshore producers (like Brazil, Norway or the United States in the Gulf of Mexico) Argentina and Uruguay together would need to deliver sustained output of at least 500,000 to 1 million barrels per day. Studies of the Northern Argentina Basin suggest that level of production is geologically feasible over the long term, but only if multiple large-scale discoveries follow.