Britain's President Energy said Friday the Paraguayan government has granted it an interest of up to 80 percent in an 18,507-sq.-kilometer (7,145-sq.-mile) prospect area in the Chaco region.

The London-based company said in a statement that it was granted the farm-in option for the Hernandarias natural gas block at no cost, subject to government and regulatory approvals.

It said that on completion of the agreement it would fund the first $17 million of a work program in that "promising" area, including the drilling of an exploratory well during the three-year exploration phase.

President Energy Chairman Peter Levine said the company would carry out the work in partnership with Paraguay's Hidrocarburos Chaco S.A.

The British company has "a significant level of understanding" of the area due to the work it has carried out in its contiguous Pirity and Damattei concessions, Levine said.

The Hernandarias block is of great interest to President because it has the same geological characteristics as adjacent Andean mountain zones in Bolivia and Argentina, where natural gas reserves totaling roughly 14 million barrels of oil equivalent have been found, the company said.

President Energy has invested some $30 million since last year on a seismic study to determine the location for three wells it plans to drill this year in its Paraguayan operation areas.

The drilling of those wells will begin in March, the Public Works Ministry's hydrocarbons director, Narciso Cubas, said.

A total of 49 oil wells have been drilled in Paraguay, including 43 in Chaco. None of them yield crude, however, because companies have not found sufficient quantities to make production profitable, Cubas said.

The Chaco is a vast, semi-arid, sparsely populated region that spans the northern half of Paraguay and also parts of Bolivia, Argentina and Brazil.

Paraguay has searched for oil in that region for years in a bid to end its total dependence on imports of crude derivatives and natural gas from Brazil, Argentina and Venezuela. EFE