Oil majors are evaluating bids for offshore exploration rights in Argentina, a major change in a country that sent Spanish energy giant Repsol packing six years ago and has seen little offshore exploration for decades.

To secure bids, Argentina will need to show it has moved beyond its historical fluctuations between free-market policies and left-wing populism and that it has made progress in lowering costs for energy firms.

Oil companies including Shell and Statoil told Reuters they are looking at bidding in the auctions, to be held later this year, and a government official said Exxon and Chevron have also shown interest.

The country faces fierce competition to attract the billions of dollars of investment needed to develop deepwater reserves. Brazil, Ecuador, Mexico and neighboring Uruguay will all auction offshore blocks in 2018 after undertaking oil market reforms or revising contract terms to facilitate the entry of the world’s top energy companies.

For Big Oil, the potential access to Latin American energy reserves is unprecedented. In many countries now opening, including Argentina, resource nationalism has long barred their entry or limited opportunities.

Six years ago, former populist President Cristina Fernandez expropriated Repsol’s stake in Argentina’s state-owned oil company YPF SA. The move sent chills through both the energy industry and the entire private sector.

Interviews with oil industry executives, consultants, geologists and officials point to optimism for Argentina’s upcoming auctions and for President Mauricio Macri’s government, which has sought private sector and US government help in structuring the process.

“Growing confidence in the current government’s policies – their focus on trying to create an environment that is attractive for investments – has been the big change,” Shell’s head of deepwater Wael Sawan told Reuters on the sidelines of an industry gathering in Houston.

“It’s that focus that has created more interest by the sector to say ‘why not, let’s look at this.'”

The auction will be a test of company confidence in the longevity of Macri’s reform agenda because it can take a decade between an initial investment in offshore exploration and the first production.

Argentina will take bids for three offshore basins from July through November.

While little exploration has been done outside the Austral basin, YPF has identified 22 million barrels of oil equivalent for further investigation, upstream head Pablo Bizotto has said.

“There is a lot of interest from large companies – Chevron, Exxon Mobil, Shell,” Daniel Redondo, the secretary for strategic energy planning in Argentina’s Energy Ministry, told Reuters on the sidelines of a recent event.

Consultancy Bain & Company, on a contract with the government to gauge interest, last year interviewed more than 60 companies, including “all the majors” and independent explorers including Anadarko and Hunt Oil, said Diego Garcia, a Buenos Aires-based Bain partner. Colombia’s Ecopetrol may bid in the auctions, its chief executive told Reuters.

Norway’s Statoil, which already has onshore drilling projects in Argentina, is partnering with YPF on offshore seismic studies and is “considering future licensing rounds,” a spokesman said.

“Huge areas of the Argentinian continental shelf will be available for bids from companies,” executive vice president for exploration Tim Dodson said at an event in Buenos Aires.

“We have of course started our evaluations already.”

Chevron and Exxon declined to comment. Anadarko and Hunt did not respond to requests for comment. Firms likely won’t decide whether to bid until the full terms of the auction are published.

The decision to hold offshore auctions comes as Argentina struggles to attract investment to its Vaca Muerta shale play, which is in a remote part of Argentina that lacks infrastructure to get oil and gas to consumers.

Argentina is home to the world’s No. 2 resources of shale gas and the fourth largest of shale oil, estimates the US Energy Information Agency.

Yet oil production peaked in 1998 and gas output topped out in 2004, according to Energy Ministry data. Investment in exploration has dried up since the country’s 2001 financial crisis and the populist political response.

Under the terms of a 2014 revision to Argentina’s hydrocarbons law, which was well-received by industry, royalties paid to the national government will be 12 per cent of the value of hydrocarbons extracted and companies would receive exploration rights for three years, with an option to extend for three years.

Rights for each exploration block would be awarded to the company that pledges the most investment, as laid out in the law, Garcia said.

“Companies will be interested in studying something that has not been explored,” said Daniel Gerold of G&G Energy Consultants in Buenos Aires, who said the regional competition was unlikely to be an obstacle for Argentina.

“I do not think the big players will have used up all their exploration capital in Mexico.”

By Luc Cohen