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Exxon will start exporting natural gas from the massive Vaca Muerta shale play in Argentina to Chile, local media reported. This will make the world’s top oil company the first to commercialize the reserves of the formation that Argentina is eager to exploit to improve its energy security.
Exxon has sealed an energy swap deal with Chilean Innergy, according to which the supermajor will feed up to 1.06 million cu ft of gas daily from the province of Neuquen into the Pacifico pipeline, which will carry it to the Pemuco regasification plant. The gas will then be sent to the Mendoza province in Argentina.
The deal, for the period until end-May next year, will see Exxon export a total 31.8 million cu ft of Vaca Muerta gas, unless an energy emergency requires diverting the shipments to local destinations.
Exxon is among the biggest investors in the Vaca Muerta shale. It has already poured US$450 million into the deposit and, should things with its pilot project go well, it plans to splash another US$10 billion or more over the next 20 to 30 years.
Argentina is home to 27 billion barrels of recoverable oil and 802 trillion cubic feet of natural gas, primarily in and around multiple prolific shale basins in the central Neuquen province, including the prized Vaca Muerta shale. The formation is estimated to hold some 16.2 billion barrels of crude oil and 308 trillion cu ft of natural gas, which makes it the second-largest in terms of gas reserves globally.
Besides Exxon, Chevron, Total, BP, and Shell have also established a presence in Vaca Muerta. The Argentine government is eager to help, earlier this year introducing tax incentives to spur more investment in both shale oil and gas, and conventional exploration as it grapples with a serious energy deficit thanks to insufficient exploration up until just recently.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.