By Taos Turner
BUENOS AIRES--Chevron Corp. (CVX) has confirmed plans to
continue investing in Argentine shale oil and gas along with its
local partner, state-run energy company YPF SA (YPF, YPFD.BA).
Chevron has an agreement with YPF to fund most of a $1.5 billion
joint venture to develop vast but largely untapped shale oil and
gas deposits located in an area in southern Argentina known as Vaca
Muerta, or "dead cow" in Spanish.
"This is a significant step in our subsidiaries' joint efforts
with YPF to develop one of the most exciting shale plays in the
world today," George Kirkland, Chevron's vice chairman, said
Thursday. "Vaca Muerta could become an important contributor to
Chevron's long-term production growth."
Chevron's decision to further invest in the project comes after
a trial phase in which the U.S. company could have opted out of the
joint venture.
The first phase of the project includes drilling more than 100
wells through 2014. Under a second phase, the joint venture would
drill 1,500 wells with the aim of increasing production to 50,000
barrels of oil and 3 million cubic meters of natural gas a day.
Chevron is the first major international oil and gas company to
commit significant money to Argentina's shale oil and gas industry,
which could someday turn the country into an energy exporter. For
YPF, the Chevron deal is a key part of its plan to increase
production and reduce Argentina's dependence on imported natural
gas and fuel.
YPF Chief Executive Miguel Galuccio has said that "many
Chevrons" are needed for Argentina to fully tap all of its oil and
gas potential and become energy independent.
Argentina ranks second in the world, behind China, in
potentially recoverable shale-gas reserves, with 802 trillion cubic
feet, according to a study last month by the U.S. Energy
Information Administration. Argentina also ranks fourth in shale
oil with an estimated 27 billion barrels.
Mr. Galuccio, who was a top executive at oil services company
Schlumberger before coming to YPF, has actively tried to attract
foreign investment in Argentina. He recently held talks with
Petroliam Nasional Bhd, or Petronas, Malaysia's state oil and gas
company, to strike a deal similar to the one YPF has with
Chevron.
YPF's shares traded in New York closed 1.8% lower at $30.10
Thursday.
Write to Taos Turner at taos.turner@wsj.com
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