Repsol YPF SA, Spain’s largest oil company, found 4.5 trillion cubic feet of unconventional natural gas in Argentina, the country’s largest discovery in 35 years.
Repsol found so-called tight gas reserves at the Loma La Lata area in the Patagonian province of Neuquen after its YPF unit drilled four exploratory wells in the region, according to a statement from Madrid-based Repsol today. The company also said that it discovered so-called shale gas in the province.
Crude output at YPF, the biggest Argentina-based company by market value, climbed in the first nine months of the year for the first time since 2003 as Chief Executive Officer Sebastian Eskenazi seeks to grow in Argentina and neighboring markets. The company plans to invest as much as $3.5 billion a year in countries such as Brazil and Colombia as Argentine output slows.
“This is a new frontier,” Repsol Chief Executive Officer Antonio Brufau said today of the discovery in an interview in Buenos Aires. The find “is very important for Argentina and YPF, and therefore for Repsol,” he said.
The find boosts Loma La Lata’s reserves five-fold, according to the Argentine government’s website. Repsol also plans to work with Vale SA to jointly produce gas for a potash mine Vale plans in Argentina, Eskenazi said at a news conference in Buenos Aires.
The gas discovery “makes us all redouble our efforts to maintain and strengthen Argentina’s fiscal and trade surplus, and the accumulation of reserves and reduction of Argentina’s debt,” President Cristina Fernandez de Kirchner said.
YPF, the country’s largest employer, produces and processes about 50 percent of the South American nation’s oil and controls about as much of the domestic fuel market.
Repsol surged 65 centavos, or 3.3 percent, to 20.35 euros in Madrid, after earlier gaining as much as 4.1 percent.
Last month, Repsol said it plans to raise as much as $2.36 billion through the sale of a 15 percent stake in the unit as it seeks to reduce its holdings in the Latin American nation.
Today’s find is the largest since gas was first found at Loma La Lata more than three decades ago.
The YPF find may contain enough gas to supply the country for as much as 50 years, Agustin Rossi, head of the ruling Peronist party in the lower house of Congress, said in an interview earlier today on Argentina’s C5N television.
Drilling at the field also has uncovered some oil, according to Eskenazi. Shale gas is natural gas produced from shale, while tight gas is so named because it is difficult to access, trapped by surrounding rock and sand.
YPF may invest $3 billion to $3.5 billion a year to grow in Brazil, Colombia, Mexico and Canada, Eskenazi said in a May interview in New York. Overseas sales will account for 50 percent of total revenue in 10 years, up from 30 percent now, he said.
Crude oil for January delivery declined 44 cents, or 0.5 percent, to $88.94 a barrel at 10:56 a.m. on the New York Mercantile Exchange. The contract touched $90.76, the highest intraday price since Oct. 8, 2008.