BUENOS AIRES - Exxon Mobil Corp. denied an Argentine media report Thursday that it recently signed a new agreement with Argentina's largest energy company, YPF SA, to develop what are thought to be vast deposits of unconventional oil and gas in the South American country.
"We have not signed any new agreements with YPF in Argentina," Exxon Mobil spokesman Patrick McGinn said in an emailed statement.
McGinn said Exxon Mobil signed agreements with YPF in February 2011 to share acreage in Neuquen province.
Financial newspaper El Cronista reported that YPF and Exxon signed an unconventional oil and gas deal following a meeting between Exxon executives and government officials last week.
Argentina's Planning Ministry said in a statement that Exxon executives expressed an interest in investing in Argentina at a March 22 meeting with Deputy Economy Minister Axel Kicillof, Energy Secretary Daniel Cameron and the government's representative on YPF's board, Roberto Baratta.
McGinn declined to confirm if the meeting had taken place.
Argentina's potential to become a major producer of unconventional oil and gas locked away in shale rock has attracted a number of international energy companies, including France's Total SA, Apache Corp. and Exxon Mobil.
Last year, Exxon Mobil said it would invest up to $76.3 million with Canada's Americas Petrogas to explore for unconventional oil and gas in Argentina.
Argentina is thought to be home to some of the largest unconventional oil and gas deposits in the Americas. But extracting that hydrocarbon wealth could prove a challenge for South America's No. 3 economy due to a decade of government price caps and steep taxes on oil and gas exports. Those policies have discouraged investment in exploration, production and refining. Not surprisingly, oil production fell 18% between 2003 and 2010, according to Energy Secretariat data.
Falling gas production coupled with a booming economy have forced Argentina to import growing volumes of more expensive gas from Bolivia and Trinidad and Tobago. The situation has become so delicate that President Cristina Kirchner's government routinely cuts natural gas supplies to industrial users in the winter months to make sure enough gas is available to heat homes.
Those imports have started to take a growing bite out of the trade surplus, which is a key source of the U.S. dollars that the government uses to pay its creditors. Last year, Argentina imported $9.4 billion in fuel, natural gas and refined products.
In recent months, Kirchner has angrily accused the oil and gas industry of failing to invest enough in its operations.
Planning Minister Julio De Vido, who oversees energy policy, has demanded that companies bring their unconventional resources into production as soon as possible. But he has made only vague assurances that producers will get an adequate return on their investment.
Indeed, the government has taken a hard line with energy companies, especially YPF, as it tries to pressure companies to boost their investment. At the behest of the Kirchner administration, at least four provinces have revoked concessions held by YPF on the grounds it didn't meet its investment commitments. YPF has denied the charges and said it will fight the concession grabs in court.
YPF's future has been the subject of considerable speculation in Argentina after newspaper Pagina 12, which is close to the government, reported in late January the administration is mulling a takeover of the firm.
Cronista reported Thursday on its front page that the Kirchner administration is studying a draft proposal to buy up to 35% of YPF, with government control of its board of directors likely.
Spain's Repsol YPF SA owns 57.43% of YPF, followed by Argentina's Eskenazi family, which owns 25.46% through its Grupo Petersen holding.
YPF's American depositary receipts were recently 6.6% higher at $28.95 in New York, giving the company a market capitalization of almost $13 billion.
Copyright (c) 2012 Dow Jones & Company, Inc.
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