ARGENTINA: Argentina's YPF signs a billion-dollar agreement with U.S. energy giant Chevron to develop shale deposits in the resource-rich Vaca Muerta basin

Record ID: 447457

  • Title: ARGENTINA: Argentina's YPF signs a billion-dollar agreement with U.S. energy giant Chevron to develop shale deposits in the resource-rich Vaca Muerta basin
  • Date: 17th July 2013
  • Summary: BUENOS AIRES, ARGENTINA (JULY 17, 2013) (REUTERS) VARIOUS OF ENGINEER DANIEL MONTAMAT WORKING IN OFFICE (SOUNDBITE) (Spanish) FORMER ARGENTINE ENERGY MINISTER DANIEL MONTAMAT, SAYING: "The government is continuing with its policy which may be a heresy for their announcements about hydrocarbon sovereignty because today there is a serious balance of payments problem. Reserves have fallen, dollars are not coming in and the energy account is bleeding reserve dollars that the country has."
  • Embargoed: 1st August 2013 13:00
  • Keywords:
  • Location: Argentina
  • Country: Argentina
  • Topics: Business,Environment,Industry,Politics,Energy
  • Reuters ID: LVA9CNASJON9XNSXIAUPDJ6NVAVM
  • Story Text: U.S. oil company Chevron Corp signed an agreement with Argentina's YPF on Tuesday to invest $1.24 billion in the Vaca Muerta shale oil and gas formation, thought to be one of the biggest reserves in the Western Hemisphere.
    It is the first major investment announced in Argentina's petroleum sector since President Cristina Fernandez ordered the seizure of YPF from Repsol in May 2012, claiming the Spanish group had not invested enough in Argentina.
    The country is trying to reverse a long decline in natural gas and oil output that has hurt its trade surplus.
    However, former Argentine Energy Minister Daniel Montamat, says the deal goes against government rhetoric to restore Argentina's "energy sovereignty" over its oil and gas resources.

    "The government is continuing with its policy which may be a heresy for their announcements about hydrocarbon sovereignty because today there is a serious balance of payments problem. Reserves have fallen, dollars are not coming in and the energy account is bleeding reserve dollars that the country has," he said.
    The two companies plan to drill 100 wells in an area of 20 square kilometres (5,000 acres), known as Loma La Lata Norte and Loma Campana in an initial development phase, according to statements from YPF and Chevron.
    Looking to boost investment in its struggling energy sector, the Argentine government will also allow companies to keep their earnings in foreign exchange outside the South American country, a benefit denied to other companies, which are required to repatriate their earnings.
    On Monday (July 15), Argentina's government also published a decree to allow oil companies to export, tax free, up to 20 percent of the crude and natural gas they produce in the country, paving the way for the Chevron deal.
    Mapuche Indians staged a protest against Chevron's involvement in Vaca Muerta earlier on Tuesday (July 16), lambasting the U.S. energy giant's environmental record.

    "That YPF acknowledges that an environmental impact study needs to be carried out before this, and opposing the hydrofacturing technique which they're bringing here to extract petrol and gas unconventionally. It is highly polluting, prohibited elsewhere in the world and they're bringing it here as if it's the best thing that could happen. Adding to this, Chevron has already been criticised in other countries. Three weeks ago we came to visit our brothers, the indigenous people of Ecuador, and with them we've taken the decision not to allow Chevron enter Mapuche territory," said spokesperson for the Mapuche community, Gabriel Cherqui.
    In Buenos Aires, members of various Argentine indigenous communities teamed up with Nobel Peace Prize activist Adolfo Perez Esquivel to speak out on the agreement.
    Perez Esquivel called for revenue from the billion-dollar agreement to be equally distributed across all sectors of society, including Argentina's impoverished indigenous groups.

    "I think what needs to be debated here are the concepts of development, one (issue being) exploitation, the privileged financial capital over the life of the people and development which should be distributed equally to all sectors," he said.
    Chevron has several high-profile legal battles in South America, including its year-long tussle in Brazil following an offshore oil spill there and a two-decade international fight over rainforest pollution in Ecuador.
    In case of any local legal challenges, YPF and Chevron have agreed to go to court in the United States rather than in Argentina, according to a source familiar with the contract.
    A U.S. Department of Energy report has shown Argentina holds more natural gas trapped in shale rock than all of Europe - a bounty estimated at 774 trillion cubic feet, the bulk of it located in Vaca Muerta.
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