Petronas signs $550 million Argentine shale venture with YPF

Petronas signs $550 million Argentine shale venture with YPF

PABLO GONZALEZ

BUENOS AIRES, Argentina (Bloomberg) -- YPF SA and Petroliam Nasional Bhd., state-controlled companies from Argentina and Malaysia, signed a $550 million deal to drill fields at the world’s fourth-largest shale oil deposit in Patagonia’s Vaca Muerta.

The companies ratified a preliminary accord signed in August to develop a 187-sq-km area in Argentina’s Neuquen province, the Buenos Aires-based producer said in an emailed statement. The binding deal comes after Argentina introduced a new regulatory framework for shale and reached an agreement with Neuquen on the area to be drilled.

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 Bbbl of oil. Chevron Corp., the third most valuable oil company, entered into a partnership with YPF in July 2013 that now produces 35,000 bopd, while Dow Chemical Corp. is developing gas in an area called El Orejano.

The Petronas-YPF area is called La Amarga Chica and is located northwest of Loma Campana, the 290-sq-km 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.