* First major private investment since YPF re-nationalized
* Argentina changed regulations on Monday to lure shale
By Alejandro Lifschitz and Karina Grazina
BUENOS AIRES, July 16 U.S. oil company Chevron
Corp signed an agreement with Argentina's YPF
on Tuesday to invest $1.24 billion in the Vaca Muerta shale oil
and gas formation, thought to be one of the biggest reserves in
the Western Hemisphere.
It is the first major investment announced in Argentina's
petroleum sector since President Cristina Fernandez ordered the
seizure of YPF from Repsol in May 2012, claiming the
Spanish group had not invested enough in Argentina.
The country is trying to reverse a long decline in natural
gas and oil output that has hurt its trade surplus.
The two companies plan to drill 100 wells in an area of 20
square kilometers (5,000 acres), known as Loma La Lata Norte and
Loma Campaña in an initial development phase, according to
statements from YPF and Chevron.
Chevron said Loma La Lata field is now producing more than
10,000 barrels of oil-equivalent per day. A second phase of the
development will require the drilling of 1,500 wells.
On Monday, Argentina's government published a decree to
allow oil companies to export, tax free, up to 20 percent of the
crude and natural gas they produce in the country, paving the
way for the Chevron deal.
Companies that explore Vaca Muerta and export from the field
will also be allowed to keep their earnings in foreign exchange
outside the South American country, a benefit denied to other
companies, which are required to repatriate their earnings.
Local firm Bridas Energy also signed a preliminary deal with
YPF to drill in Vaca Muerta, but Chevron is the first company to
finalize investment plans.
Repsol has brought suit against YPF, Bridas Energy and
Chevron in Madrid, where a judge will decide whether YPF's deal
with Chevron should be frozen.
Chevron has several high-profile legal battles in South
America, including its year-long tussle in Brazil following an
offshore oil spill there and a two-decade international fight
over rainforest pollution in Ecuador.
Some 40 Mapuche Indians staged a protest against Chevron's
involvement in Vaca Muerta earlier on Tuesday.
In case of any local legal challenges, YPF and Chevron have
agreed to go to court in the United States rather than in
Argentina, according to a source familiar with the contract.
A U.S. Department of Energy report has shown Argentina holds
more natural gas trapped in shale rock than all of Europe - a
bounty estimated at 774 trillion cubic feet, the bulk of it
located in Vaca Muerta.