MercoPress. South Atlantic News Agency

YPF/Chevron signed an understanding to explore for shale gas and oil in Neuquen

YPF CEO Galuccio (R)and Ali Moshiri head of Chevron for Latinamerica and Africa

Argentina's recently nationalized oil and gas producer YPF SA and the US Chevron Corporation have signed a memorandum of understanding to explore for unconventional energy in Vaca Muerta, in the Patagonian province of Neuquen.

The news, unveiled by YPF in a statement Friday, comes as YPF Chief Executive Miguel Galuccio seeks funding and international partners to carry out an ambitious exploration and production plan over the next five years.

The memorandum cites plans “to explore unconventional hydrocarbon development opportunities in Vaca Muerta...,” YPF said in the statement. The statement did not include additional details of specific plans. Vaca Muerta, located in the province of Neuquen, is thought to be home to massive shale oil and shale gas resources.

Argentina ranks third in the world, behind China and the US, in potentially recoverable shale-gas reserves, with 774 trillion cubic feet, according to a study last year by the US Energy Information Administration.

Since Argentina's government seized YPF from Spain's Repsol SA earlier this year, Mr. Galuccio has been pushing hard to find the partners and money necessary to exploit those recourses and boost overall production.

“With partners as important as Chevron...I'm sure that this is just the first step in a relationship that will be long and important,” Mr Galuccio said in the statement.

Ali Moshiri, Chevron's president of Latin America and Africa, was similarly upbeat, according to the statement.

“We are satisfied to be accompanying YPF in this new process and the whole [energy] sector will benefit from it,” Mr. Moshiri said.

YPF needs to raise fresh cash to fund a multi billion-dollar investment plan between 2013 and 2017 that aims to reverse years of falling output and reserves. YPF has plans to drill next year 132 shale oil and 14 shale gas wells in Vaca Muerta which will demand over 3 billion dollars.

In a recent presentation, Mr. Galuccio said YPF can invest 24.7 billion dollars from its own pocket through 2017, with investment rising to 40.4 billion if the company is successful in inking joint ventures and obtaining outside financing.

Mr. Galuccio also recently met with executives from Russia's Gazprom to gauge support for joint ventures in Argentina.