Argentina seals $15 billion a year shale oil and gas deal

Argentina seals $15 billion a year shale oil and gas deal

Argentina’s President Mauricio Macri has announced that a significant deal has been reached with a number of international oil companies to invest up to US$15 billion a year in the country’s vast shale reserves.

Oil majors Chevron, BP, Total, Shell and Argentinian state firm YPF are among the companies who will invest in the Vaca Muerta site at Patagonia, containing the second largest shale gas reserves in the world.

The companies will initially commit $5 billion to the shale deposit, which will rise to the reported $15 billion in subsequent years, in return for lower labour costs and further state subsidies.

The Argentinian government will offer a fixed local commodity price of $7.50 per million British thermal units of natural gas until 2020 as part of the deal.

These government concessions have been struck in order to boost flagging production levels over recent years. Despite the Vaca Muerta deposit spanning roughly 30,000 square kilometres, Argentina has been dogged by a lack of investment and become increasingly reliant on imports.

However, announcing the deal, Macri declared ‘a new era’ for the energy sector.

“This is a day that will open the energy future of our country,” said the President.