YPF, Petronas ink $550 million JV to develop Vaca Muerta

8/28/2014

YPF, Petronas ink $550 million JV to develop Vaca Muerta

PABLO GONZALEZ

KUALA LUMPUR, Malaysia (Bloomberg) -- YPF SA and Petroliam Nasional Bhd., state-controlled companies from Argentina and Malaysia, signed a $550 million accord to develop shale oil at the world’s fourth-largest deposit in Vaca Muerta.

Miguel Galuccio and Shamsul Azhar Abbas, CEOs for YPF and Petronas, respectively, signed a deal to develop a 187-sq-km area (72 sq miles) at Petronas’s Kuala Lumpur headquarters Aug. 28, the Buenos Aires-based producer said in an emailed statement. YPF will invest $75 million and Petronas $475 million to drill more than 30 wells in three years in southwestern Argentina. Depending on the results, the program could be expanded to a five-year $1 billion investment, YPF said.

YPF is seeking partners to develop Vaca Muerta, a formation the size of Belgium that contains at least 23 Bbbl of oil. Chevron Corp., the third-largest oil company by market value, signed a memorandum of understanding with YPF in August 2012 that 11 months later led to a development accord. Chevron’s initial Vaca Muerta investment in Loma Campana of $1.24 billion was later expanded to $16 billion.

“In line with our strategic plan and results obtained in Loma Campana, it appears to us a big opportunity for YPF and for Argentina to add Petronas as a partner,” Galuccio said in the statement. “Petronas has world class standards and will help us develop our vast shale oil and gas resources.”

Same Architect

The Petronas-YPF area called La Amarga Chica, or little bitter, is in Neuquen province. It is northwest of Loma Campana, the 290-sq-km area in the Vaca Muerta shale formation where Chevron is working with YPF.

Both CEOs will discuss the accord in a teleconference from Petronas’ headquarters at 12:30 p.m. Argentine time.

The oil and gas producers also have in common an architect who designed their headquarters. Cesar Pelli, the Argentine-American who designed YPF’s headquarters in Buenos Aires also designed the Petronas Twin Towers, which for a time were the world’s tallest building.

YPF’s American depositary receipts rose 0.2% to $33.36 at 10:43 a.m. in New York. The ADRs have doubled in the past year.

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