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YPF Signs MOU With Petronas to Develop Shale Oil in Vaca Muerta

Feb. 18 (Bloomberg) -- YPF SA and Petroliam Nasional Bhd., state-controlled companies from Argentina and Malaysia, said they signed a memorandum of understanding to jointly develop shale oil at the world’s fourth-largest deposit in Vaca Muerta.

Miguel Galuccio and Shamsul Azhar Abbas, chief executive officers for YPF and Petronas, respectively, signed the preliminary deal to develop a 187-square kilometer area (72 square miles) at YPF’s Buenos Aires headquarters today, the Argentine producer said in an e-mailed statement. Technicians from both companies will meet to study the agreement’s feasibility and later could negotiate a possible development accord, YPF said.

YPF is seeking shale partners to develop Vaca Muerta, an areas the size of Belgium that contains at least 23 billion barrels of oil. Chevron Corp., the third-largest oil company by market value, signed an MOU with YPF in August 2012 that 11 months later became a development accord. Chevron initially agreed to invest as much as $1.24 billion in a pilot program that could be expanded to a long-term investment of $16 billion.

“The meeting with Petronas allows us to move forward in adding a new partner to develop Vaca Muerta in line with our strategic plan,” Galuccio said in the statement. “It is also in line with our philosophy of getting partnerships to take advantage of our vast shale oil and gas resources.”

Repsol Compensation

The Petronas-YPF area called “La Amarga Chica,” which means little bitter in Spanish, is located in Neuquen province, home to Vaca Muerta shale formation in southwestern Argentina. La Amarga Chica is northwest of Loma Campana, the 290-kilometer area where Chevron is working with YPF.

YPF, which the Argentine government expropriated from Spain’s Repsol SA in April 2012, is seeking partners to invest in its $37.2 billion five-year plan initiated last year. Repsol officials are in Argentina meeting with Economy Minister Axel Kicillof’s team to discuss seizure settlement terms, Infobae reported earlier today on its website, citing government sources it didn’t name.

The accord is very advanced with remaining points centered on legal definitions, Infobae said. The compensation deal probably will be closed in March, it reported.

The Argentine government reached a preliminary agreement with Madrid-based Repsol on Nov. 25 to compensate the company for the 51 percent stake in held in YPF. The two sides are negotiating a final resolution of the dispute.

To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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