Argentina’s state-controlled energy company YPF and Malaysia’s Petronas are forming a joint venture to invest US$2.3 billion over the next four years in the country’s Vaca Muerta shale oil fields, the president’s office announced on Tuesday.
State-owned Petronas will have an equal stake in the project through its subsidiary Petronas E&P Argentina SA, the presidency said in a statement.
Petronas has not yet commented on the announcement.
The Belgium-sized Vaca Muerta deposit, located in western Argentina, is regarded as having the world’s second-largest shale gas and fourth-largest shale oil deposits.
“This investment will allow us to increase YPF’s petrol production by 30 percent by 2022, which will represent a total increase for Argentina of 15 percent,” the statement said.
The companies’ objective is to reach a production equivalent of 60,000 barrels a day by 2022, it said. Total investment could reach $7 billion within 20 years, it said.
Successive governments have targeted Vaca Muerta to reverse Argentina’s energy deficit but the plans have been hindered by a lack of infrastructure.
YPF chief executive Daniel Gonzalez told Reuters last month the company would bolster both unconventional oil and gas production by investing between $4 billion and $5 billion per year through 2022.
Petronas and YPF have already partnered in pilot exploration and production initiatives and will begin development of the unconventional fuel project in the Amarga Chica block in the province of Neuquen.
The announcement is good news for the beleaguered government of Mauricio Macri, which was forced to seek an IMF bailout earlier this year.
Macri discussed the deal in a meeting on Tuesday with YPF president Miguel Gutiérrez, Finance Minister Nicolás Dujovne and Energy Secretary Javier Iguacel, the president’s statement said.