YPF SA, Argentina’s largest company, and Dow Chemical Co.’s Argentine unit signed a final accord to invest $188 million to jointly develop shale gas at the country’s Vaca Muerta formation.
Dow will provide $120 million over a year while YPF, nationalized in April 2012, will invest $68 million to develop 16 shale gas wells, the Buenos Aires-based company said in a statement today. Dow, the largest U.S. chemical producer by sales, is YPF’s second shale partner after Chevron Corp.
Argentine President Cristina Fernandez de Kirchner’s government seized a 51 percent stake in YPF from Spain’s Repsol SA (REP) in April 2012 to stem fuel imports that generated an energy deficit of $5.4 billion this year through Aug. 31, according to figures released yesterday by Argentina’s National Statistics Institute. YPF said Sept. 20 it is planning its first overseas bond offering since the nationalization as it seeks to raise financing for a $37 billion five-year investment plan to develop Vaca Muerta.
“This agreement confirms the path we decided to take when we presented our strategic plan,” YPF Chief Executive Officer Miguel Galuccio said in the statement. “We said we needed to develop a shale gas pilot and today we are materializing it.”
Dow Chemical Executive Vice President Jim Fitterling signed the agreement that will drill wells at the El Orejano block in Neuquen province, which has the potential to produce 3 million cubic meters of gas a day, YPF said in the statement.
YPF and Chevron, the second-biggest U.S. oil company, formed a $1.24 billion shale partnership in July to tap the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir at Vaca Muerta in southwestern Argentina.
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