The government of Argentina finally attracted companies ready to invest USD 5 billion in Vaca Muerta shale, as informed by the president of Argentina M. Makri.
Agreements reached with five companies – Argentinean YPF and Pan American Energy, French Total, American Chevron and Irish-British Shell. The companies agreed to invest USD 5 billion during the first year, USD 2,3 billion fall on YPF.
In the following years the amount will grow more than twice.
The investment news comes after Mauricio Macri’s government implemented some significant legislative changes to encourage more foreign investments in Argentina’s oil and gas industry. For gas investors, the government came up with price incentives that will shield them from market prices until 2022. So, next year, gas producers in Vaca Muerta will receive $7.50 per MMBtu of gas at the wellhead, which will gradually decline to $6 per MMBtu by 2021.
Another part of efforts to stimulate energy investments came in the form of scrapping a duty on oil product exports. Last year, Macri’s government also pledged to remove subsidies for the local oil and gas industry, although it gave no timeline for this.
Vaca Muerta is a geologic formation located at Neuquén Basin in Argentina. It is best known as the host rock for major deposits of tight oil (shale oil) and shale gas.
The large oil discovery in the Vaca Muerta Formation was made in 2010 by the former Repsol-YPF, which announced the discovery in May 2011. The total proven reserves are around 927 million barrels, which makes it the largest shale formation in the world.