Chevron Corp. is finalising the details of a giant investment which will help to make Argentina energy independent by developing what is considered the world’s second largest shale oil reservoirs.
Ali Moshiri, the head of Chevron’s Latin America, Middle East, and Africa division, spoke to reporters in Buenos Aires, saying that, “some people think China is the second-largest shale oil. I believe after the U.S., Vaca Muerta holds the largest shale oil in terms of reserves.”
The Vaca Muerta shale formation has been estimated to hold at least 23 billion barrels of oil equivalent.
Moshiri met with Miguel Galuccio, the chief executive officer at state-owned YPF SA, to sign a contract which establishes the terms for a partnership that will begin with an investment of $1.5 billion, and could grow to as much as $15 billion as development of the field progresses in the future.
The deal faces threats from the fact that both parties are involved in large lawsuits, which may result in large payments of compensation being made in the future. Repsol currently has 40% of its Argentine assets frozen as punishment for failure to pay Ecuador the $19 billion in damages it has been ordered to pay as recompense for environmental damage.
Moshiri failed to explain how Chevron intends to operate in Argentina without its funds being seized, only stating that “at the end of the day the right decision will be made by the people in Argentina, the government and the judiciary system.”
YPF is also in the middle of a lawsuit being held against it by Repsol, whom lost its controlling shares in the Argentine energy company when President Kirchner illegally seized them in 2012.
By. James Burgess of Oilprice.com