MONTEVIDEO – Uruguayan state-owned refining company Ancap signed an oil-prospecting agreement Friday with energy firm YPF covering four provinces in the country’s north.

The accord covers a 10,000-sq.-kilometer (3,861-sq.-mile) area in the provinces of Artigas, Rivera, Salto and Tacuarembo, where the Argentine firm will have exclusive prospecting rights, Ancap director Juan Gomez, who signed the contract, told Efe.

YPF’s business development director, Alejandro Jotayan, inked the deal on behalf of the Argentine company, a unit of Spanish oil major Repsol-YPF.

Under the contract terms, YPF “acquires priority” in the event that after the studies are concluded “it wants to take the accord to a higher level for exploration (drilling) and eventual production,” Gomez said.

He added that Uruguayan authorities and Ancap technicians are optimistic that after the prospecting phase YPF will want to continue working in the area.

YPF, whose contract does not set a start date for the work, now will begin applying for environmental licenses and other permits required for prospecting operations.

“We (at Ancap) are fully willing to collaborate” in having these permits approved, Gomez said, adding that “surely before year’s end YPF’s prospecting work will begin.”

The official said this is the second prospecting deal Ancap has signed after a 2009 agreement with Dallas, Texas-based Schuepbach Energy, which has conducted studies in Durazno, Tacuarembo, Salto and Paysandu provinces.

Twenty days ago, that company “asked us to move to the next stage and sign an exploration contract in the area already studied and even expand it to Artigas as well,” Gomez added.

Ancap “is continuing to make progress” in the search for oil, which, if discovered, “would mark a fundamental change in the life of the country,” the director said.

Uruguay imports all the oil it consumes – 15-16 million barrels a year, 50 percent of which comes from Venezuela and the rest from Russia and African countries. EFE