MercoPress. South Atlantic News Agency

Petrobras calls for clear rules to foster investment in shale production development

Paulo Aquino said a clear investment environment is needed to lower the risks

Brazil’s oil and gas Petrobras said Argentina needs clear rules to foster investments if it wants to develop its unconventional oil and gas resources.

“A clear investment environment is needed to lower the risks of investing in production of tight and shale gas and oil in Argentina” said Paulo Aquino, the Rio de Janeiro-based oil producer’s executive manager for Latin America, during a presentation at the Arpel conference in Punta del Este, Uruguay.

Petrobras, which is the largest oil company in Latin America by market value, is looking to increase production of so-called unconventional resources in Argentina, said Aquino.

Argentina last year seized a majority stake in YPF, the country’s largest oil company, by taking over 51% of its shares from Spain’s Repsol SA in an attempt to reverse years of declining output. YPF holds the bulk of Argentina’s shale resources and the Vaca Muerta formation in Argentine Patagonia is estimated to hold at least 23 billion barrels of oil equivalent, according to a survey by Ryder Scott.

Petrobras Argentina SA finished drilling its first shale oil well in March at Vaca Muerta. While the company is analyzing results from the well, it’s already producing tight gas after having drilled 29 tight gas wells in three basins, Aquino said.

In related news Canadian energy company, Americas Petrogas, announced it made a shale natural gas discovery onshore in the Vaca Muerta formation.

The company said it discovered natural gas by hydraulically fracturing the Los Toldos I block in the Vaca Muerta shale formation. It said it was able to produce as much as 3.2 million cubic feet of natural gas during initial production tests.

Regional Managing Director Guimar Vaca Coca said the find is situated less than a mile away from a major natural gas pipeline.

In March, Argentine energy company YPF said it signed a memorandum of understanding with Dow Chemical to develop shale natural gas in the country. YPF said the deal is for shale reserves in more than 10.000 acres in Neuquen province.

The US Energy Department's Energy Information Administration estimates that Argentina has 774 trillion cubic feet of technically recoverable shale gas resources, the third most in the world.