Malaysia’s state-run Petronas signed a $550 million agreement with YPF SA, Buenos Aires, on Aug. 28 in Kuala Lumpur detailing terms and conditions for the development of oil from the giant Vaca Muerta shale in Argentina’s Neuquen province.
The project calls for three stages, the first of which involves the development of a shale oil pilot on the 187-sq km La Amarga Chica block, slated to begin in first-quarter 2015. More than 30 wells will be drilled, both vertical and horizontal. YPF will serve as the area’s operator with 50% interest.
Petronas will provide $475 million of the agreed-upon total investment. Overall investment is expected surpass $1 billion over the next 5 years.
“We see Neuquen as a very prolific area, with high growth potential that will surely greatly benefit Argentina,” noted Shamsul Azhar Abbas, Petronas chief executive officer.
Miguel Galuccio, YPF chief executive officer, said, “We’re putting a resource into production that can change the energy future of our country.”
The US Energy Information Administration in 2012 estimated Vaca Muerta to hold 741 million bbl of recoverable shale oil.