BUENOS AIRES - Argentina's top oil and gas producer, state-run YPF SA, and Chevron Corp. have signed a memorandum of understanding to explore for unconventional energy in the South American nation.
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.
But immediately after the statement's release, the Spanish oil company Repsol SA said it will try to prevent Chevron and YPF from working together.
Argentina's government expropriated YPF from Repsol earlier this year and it has not publicly offered to compensate the Spanish company for the loss of its unit. Repsol is seeking up to $10 billion in compensation.
"Repsol will take legal action against this agreement. We do not plan to let third parties benefit from illegally confiscated assets. Our legal teams are already studying the agreement," Repsol Spokesman Kristian Rix said in an emailed statement.
YPF declined to comment on Repsol's plans.
The memorandum between YPF and Chevron 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 U.S., in potentially recoverable shale-gas reserves, with 774 trillion cubic feet, according to a study last year by the U.S. Energy Information Administration.
Since Argentina's government expropriated YPF, Mr. Galuccio has been pushing hard to find the partners and money necessary to exploit those resources 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.
Chevron Media Advisor James Craig said the two companies have been collaborating together since the early 1990s.
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.
In a recent presentation, Mr. Galuccio said YPF can invest $24.7 billion 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.
Mr. Galuccio has acknowledged that some investors won't be interested in partnering with the company because of the way YPF was expropriated from Repsol.
But he has also voiced confidence that investor interest will rise once YPF is able to start showing concrete results from its exploration and production program.
Copyright (c) 2012 Dow Jones & Company, Inc.
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