Argentine Government Criticizes Court Probe of YPF-Chevron Deal

An Argentine federal court ruling to investigate whether President Cristina Fernandez de Kirchner offered benefits to Chevron Corp. for its development accord with YPF SA is considered “strange” by Argentine Cabinet Chief Jorge Capitanich.

“There are several people with vested interests inside and outside the country seeking to affect the strategic interests of Argentina through these judiciary actions,” Capitanich said in a statement distributed by state-controlled news agency Telam today.

More than a year after expropriating 51 percent of YPF, Fernandez signed a decree on July 15 allowing energy companies that invest $1 billion over a five-year period the ability to sell as much as 20 percent of their output abroad without paying export taxes. The next day Chevron and YPF agreed to develop the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir in southern Argentina for a long-term investment plan of as much as $15 billion.

A lower court prosecutor in August dismissed a lawsuit from Buenos Aires legislator Alejandro Bodart and environmental lawyer Enrique Viale accusing Fernandez of abuse of authority, wrongdoing and potential enviromental damage. Late yesterday a higher federal court ruled Fernandez should be investigated.

Chevron, the world’s third-largest energy company by market value, and state-run YPF this year plan to drill 170 wells in a 96,000-acre area in Argentina’s Vaca Muerta formation. The joint venture partners are targeting daily production of 50,000 barrels of shale oil and 3 million cubic meters of shale gas.

Exxon Mobil Corp. and Royal Dutch Shell Plc are the world’s first- and second-biggest energy companies by market value, respectively.

Before it's here, it's on the Bloomberg Terminal.