Repsol YPF, Tierra del Fuego Sign E&P Accord

Spanish oil firm Repsol YPF (NYSE: REP) and authorities from Argentina's Tierra del Fuego have signed an agreement to promote exploration and production of hydrocarbons in areas owned by the provincial government, local papers reported.

Tierra del Fuego government representative Hugo Coccaro and Repsol YPF representative Juan Carlos Fernandez Zarate signed the agreement.

The agreement is designed to determine the "mechanisms and joint procedures" for the exploration and production of hydrocarbons in areas owned by the province by constitutional mandate.

With good potential exploration upside, Tierra del Fuego also offers an attractive tax-free zone to foreign oil companies.

"We know about the province's potential in terms of oil and gas but we need a strong investment. We have decided to sign an agreement for reciprocal cooperation so our technical teams can keep working and see the possibility of investment in the future," newspaper Ambito Financiero quoted Coccaro as saying.

"We have invited the representatives of YPF in the same way we did with the consortium of Total, Wintershall and Panamerican Energy, which are the companies that work in this area," Coccaro said.

The consortium led by France's Total started natural gas production in June 2005 from the Carina and Aries fields in the Cuenca Marina Austral-1 (CMA-1) block off the coast of Tierra del Fuego.

Gas production from Carina and Aries will be used gradually to substitute declining production on existing fields in Tierra del Fuego and supply more gas to the Argentine market.

The project had been delayed because of lack of transport capacity on the 296km, 30-inch diameter San Martín pipeline linking Tierra del Fuego to central Argentina, but that pipeline has been expanded to allow the transport of gas from CMA-1.

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