Dec 11, 2014 5:53 AM GMT+0800
YPF SA (YPF) and Petroliam Nasional Bhd., Argentina and Malaysia’s state-owned energy companies, respectively, signed a $550 million accord to drill fields at the world’s fourth-largest shale oil deposit in Patagonia’s Vaca Muerta.
With Brent crude falling to a five-year low, Miguel Galuccio and Shamsul Azhar Abbas, chief executive officers for YPF and Petronas, respectively, ratified today in Kuala Lumpur a preliminary accord signed in August to develop a 187 square kilometer (72 square miles) area, the Buenos Aires-based producer said in an e-mailed statement. Oil has plunged 36 percent since the preliminary deal was signed.
YPF, control of which was seized from Repsol SA in April 2012, is bringing in partners to finance development of a shale formation the size of Belgium that contains at least 23 billion barrels of oil.Chevron Corp. (CVX), the second-largest U.S. energy producer, entered into a partnership with YPF in July 2013 that now produces 35,000 barrels a day, while Dow Chemical Corp. is developing gas in an area called El Orejano.
“We are signing this deal amid a particular scenario in world energy,” Galuccio said. “It shows there are companies willing to move forward, bet on the long-term and advance along with YPF.”
La Amarga Chica
The binding deal comes after Argentina introduced a new regulatory framework for shale and reached an agreement with Neuquen province on the area to be drilled. The province will grant both companies a 35-year concession to develop the area as the accord will help Argentina become energy self sufficient, YPF said.
The Petronas-YPF area is called La Amarga Chica and is located northwest of Loma Campana, the 290-square-kilometer venture with Chevron. Under terms of the arrangement, Petronas will invest $475 million in an initial phase of 35 wells to be operated by YPF. Spending will be shared equally if the venture moves beyond the pilot project.
YPF’s American depositary receipts slid 5.4 percent to $26.62 to at the close in New York. Brent for January settlement fell below $65 for the first time in more than five years.
To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at email@example.com
To contact the editors responsible for this story: James Attwood at firstname.lastname@example.org