Argentina's state-run energy company YPF signed a
memorandum of understanding on Tuesday with the local unit of
Dow Chemical Co, a first step toward possibly creating a
joint venture to develop shale gas on the "El Orejano" block
within the vast Vaca Muerta shale formation.
The agreement will allow the two sides to negotiate the
terms and final conditions of a deal in which YPF would cede a
50 percent stake to Dow to jointly develop the area, sized at 41
square kilometers (10,131 acres).
Argentina signed a similar agreement with Chevron Corp
in December, but negotiations are moving slowly due to a
court freeze on the U.S. company's assets in Argentina over a
pollution case in Ecuador.
Vaca Muerta - located in southern Argentina - has caught the
attention of international investors because it holds one of the
world's biggest deposits of shale resources, with an estimated
23 billion barrels of oil equivalent. YPF has concessions on 40
percent of the site.
Argentina's government seized control of YPF from Spain's
Repsol last year, saying that company had not invested
enough to sustain oil and natural gas production. YPF is now
trying to raise $4.5 billion in private capital to finance an
estimated $32.6 billion in investments over the next five years.