[Story updated July 17, adding details and background throughout]
A subsidiary of Chevron Corp. signed an agreement with affiliates of Argentina’s YPF SA that will move forward shale oil and gas resource development from the Vaca Muerta formation in Argentina’s Neuquen province.
It’s the first time a major oil company has made a significant investment in Argentina since President Cristina Fernandez de Kirchner expropriated YPF SA. Chevron is believed to have negotiated for about 7 months on the agreement.
The Chevron-YPF agreement calls for $1.24 billion in spending during the first phase of development in the Loma La Lata Norte and Loma Campana areas.
YPF was a state-run company until it was privatized in 1999. Argentina’s government renationalized YPF by expropriating 51% of it from Repsol YPF SA, which helds 57% of the company (OGJ Online, Apr. 26, 2012).
Kirchner has said YPF underinvested in exploration and production, forcing Argentina to become a net energy importer in 2011 as a result of declining oil and gas production.
YPF wants to again become an oil and gas exporter, and it has said the development of Vaca Muerta could help reach that goal.
The Chevron-YPF pilot program will include the drilling of 100 wells in a 5,000-acre tract, part of a 96,000-acre concession, Chevron reported.
Currently, Loma La Lata field is producing more than 10,000 boe/d. Chevron Argentina produces an average of 21,000 b/d of oil and 4 MMcfd of natural gas in the Neuquen basin, where it holds operated interests ranging 18.8-100%.