Chevron Corp. has just signed a $1.5 billion deal with Argentina's state-owned oil company YPF to form a joint venture and begin developing the giant Vaca Muerta basin.
John Watson, the CEO of Chevron, told the Associated Press that the "Vaca Muerta is a world-class share and fits perfectly within our solid portfolio of non-conventional resources. It's consistent with our strategic objective of entering into new and attractive areas early in the process."
This represents the first large investment made by a foreign oil company in Argentina since President Cristina Fernandez de Kirchner illegally seized YPF from Repsol in 2012.
Argentina has the second largest shale oil and gas reserves in the world, yet despite its best efforts has struggled to attract investors to help it develop those reserves after its treatment of Repsol, and then Repsol threatening to sue any company that works with YPF if it does not receive the $10 billion from Argentina that it is demanding in compensation for its stolen shares.
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Vaca Muerta. (Taringa)
After being appointed as the head of YPF last year, Miguel Galuccio announced an ambitious five year plan to attract $37 billion investment in order to develop the country's rich shale reserves, but despite talks with many companies around the world, very little investment has been secured.
Argentinian authorities hope that this show of confidence by an international oil major will encourage other companies to invest in the country.
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In another attempt to make Argentina a more attractive country for investment, Kirchner has recently offered privileges to any company that invests more than a billion in developing shale. After five years those companies will be allowed to export up to 20% of the crude oil and natural gas that they extract without paying any taxes.
The venture between YPF and Chevron will begin with a $300 million fracking project to drill 100 wells in the Enrique Mosconi Cluster in the Vaca Muerta play. In the future that development will be expanded to include more than 1,500 wells by 2017, which YPF expects to produce 50 million barrels of oil and 3 million cubic meters of natural gas a day.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More
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