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At the beginning of this year Repsol revised it estimates for the amount of shale oil and gas reserves in the Vaca Muerta field in southern Neuquen province to 23 billion barrels, enough to double Argentinas oil and gas output, and a huge economic boost to the South American country. However the Spanish owned Repsol also estimated that it would cost $25 billion a year to develop the play, and warned that Argentina would need to overhaul its energy policy to attract the necessary investment. In response to this evaluation the Argentine President Cristina Fernandez illegally seized control of the YPF energy company from Repsol.
The new chief executive of the now state owned energy company, Miguel Galuccio, announced that YPF will ambitiously spend up to $7 billion a year for the next five years in a plan to help recover the steadily declining oil and natural gas output.
He blamed the lack of investment by Repsol for the vast drop in crude oil and natural gas production over the past decade, and believes that YPF could six percent annually with his plans to drill 1,000 new wells starting next year.
Galuccio said that, “we are going to change the future building a new model through massive development of unconventional energy.”
YPF will look for both local and international investors to finance the plan, but they may find these investors very hard to come by due to the lack of trust in the Argentine government following the manner in which they dealt their last energy partner Repsol. Analysts are saying that the government will struggle to find partners who are willing to make large investments in such a risky business climate.
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…