Argentina's Tecpetrol, part of the Techint Group, said on Thursday it would invest US$2.3 billion in the Vaca Muerta shale fields through 2019, the largest announcement in the formation in years. Tecpetrol said in a statement the investment was made possibly due to measures from President Mauricio Macri's government, including a deal with labor unions earlier this year and a definition of price supports this month.
Tecpetrol will aim to produce an average 14 million cubic meters of shale gas per day by 2019 said Guillermo Pereyra, a union leader and senator who participated in a Thursday meeting where executives communicated the plan to Macri.
That is half the amount of gas Argentina currently imports, Pereyra said, and will help Macri's government reach its goal of energy self sufficiency. An energy deficit is a major contributor to Argentina's fiscal deficit.
About the size of Belgium, the Vaca Muerta formation is one of the largest shale reserves in the world but it has been mostly unexplored due to high production costs and lack of labor flexibility. The investment would eventually result in 1000 new jobs, Pereyra and Tecpetrol said.
We are going to arrive in September with five or six drilling teams, each one with about 100 people, this is very important, Pereyra said in a telephone interview.
Macri's government in January announced an agreement with oil companies and unions to lower labor costs and stimulate investments, which until now have been slow to arrive.
Argentina's oil corporation YPF said it reached a preliminary deal with Shell last month to develop oil and gas assets in the Vaca Muerta involving a US$300 million investment from Shell.
Earlier this month the government said it would gradually lower the price it guarantees for gas drilled from new wells, currently US$7.50 per million British thermal units of gas, to encourage investment sooner rather than later.
The Vaca Muerta contains 308 trillion cubic feet of shale gas and 16.2 billion barrels of shale oil, according to the US Energy Information Administration.