Argentina’s oil and gas YPF and Dow Chemical Co. Argentine unit signed a final accord to invest 188 million dollars to jointly develop shale gas at the country’s Vaca Muerta formation, in the Patagonian province of Neuquen.
Dow will provide 120 million over a year while YPF, nationalized in April 2012, will invest 68 million to develop 16 shale gas wells, the Buenos Aires-based company said in a statement on Tuesday.
Dow, the largest US chemical producer by sales, is YPF second shale partner after Chevron Corp.
Argentine President Cristina Fernandez government seized a 51% stake in YPF from Spain’s Repsol SA in April 2012 to help stem fuel imports that generated an energy deficit of 5.4 billion this year through Aug. 31, according to figures released by Argentina’s stats office, Indec.
YPF said on 20 September it was planning its first overseas bond offering since the nationalization as it seeks to raise financing for a 37 billion five-year investment plan to develop Vaca Muerta.
“This agreement confirms the path we decided to take when we presented our strategic plan” YPF Chief Executive Officer Miguel Galuccio said in the statement. “We said we needed to develop a shale gas pilot and today we are materializing it.”
Dow Chemical Executive Vice President Jim Fitterling signed the agreement that will drill wells at the El Orejano block in Neuquen province, which has the potential to produce 3 million cubic meters of gas a day, YPF said in the statement.
YPF and Chevron, the second-biggest US oil company, formed a 1.24 billion shale partnership in July to tap the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir at Vaca Muerta in southwestern Argentina.