The Argentine state has been languishing in financial turmoil for the last few decades, but things could potentially turn around for Buenos Aires with the exploitation of vast hydrocarbon deposits in the Neuquen province. When Repsol S.A. (NASDAQOTH: REPYY.PK) discovered the Vaca Muerta oil field in 2010, the Spanish petroleum refining company initially estimated the shale oil reserve to be around 927 million barrels. Today, the state-owned Argentine energy company YPF (NYSE: YPF) believes that the reserve stands at around 22.5 billion barrels. If true, the Vaca Muerta shale oil field ranks as the second largest in the world for shale gas deposits and fourth largest in oil reserves. Due to Argentina’s ongoing problems with its currency and external debt, Buenos Aires had faced difficulties acquiring the necessary credit to make the initial investment for further exploitation of the wealth at the foot of the Andes. YPF appeared to resolve this problem on July 16, when Chevron (NYSE: CVX) signed a deal with YPF to invest $1.24 billion to drill 100 wells in a 20 square kilometer area. In return, the Argentine state promised not to tax 20% of Chevron’s exports and allow earnings to be kept in foreign exchange outside Argentina.
Posted on: Tue, 13 Aug 2013 12:40:51 +0000
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