Dow Chemical, YPF sign $188 million Argentina shale gas deal
BY TAOS TURNER
BUENOS AIRES -- YPF and the local unit of Dow Chemical agreed to invest a total of $188 million to explore for shale gas in the resource rich area known as Vaca Muerta.
Dow will invest $120 million as part of the deal, with the remainder coming from YPF.
The agreement calls for the companies to drill 16 wells to extract shale gas as part of a pilot program.
The firms had said in March they planned to work on a joint venture in the province of Neuquen, where Vaca Muerta is located, to develop unconventional gas resources.
"With this agreement, the companies will work together to identify new projects aimed at expanding Argentina's petrochemical industry in areas of mutual interest." YPF said in a statement.
YPF is Argentina's top oil and gas company and accounts for over 35% of the country's oil and gas market share.
Argentina ranks second in the world, behind China, in potentially recoverable shale gas reserves, with 802 Tcf, according to a study last month by the United States Energy Information Administration. Argentina also ranks fourth in shale oil with an estimated 27 Bbbl.
Even so, the country stopped exporting gas in 2004 to ensure it had enough gas to meet domestic demand that was rising alongside its then booming economy.
Demand for gas grew at a faster pace than production, turning the country into a net importer and requiring the government to spend billions a year on imported energy.
YPF is attempting to reverse this trend and put Argentina on a path to energy independence by investing in exploration and production and getting other local and foreign companies to do the same. Industry experts say it will take somewhere around $75 billion to develop Vaca Muerta's resources.
Dow Jones Newswires