BUENOS AIRES U.S. oil company Chevron (CVX.N) signed an agreement with Argentina's YPF (YPFD.BA) on Tuesday to invest $1.24 billion in the vast 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 Spain's Repsol (REP.MC) in 2012.
The investment will permit the two companies to drill 100 wells in an area of 20 square kilometers (5,000 acres), according to statements from YPF and Chevron.
On Monday, Argentina's government published a decree to allow oil companies to export up to 20 percent of the crude and natural gas they produce in the country tax free, paving the way for the Chevron deal.
Companies that explore Vaca Muerta and export from the field will be allowed to keep their earnings in foreign exchange outside the South American country, a benefit denied to other companies that are required to repatriate their earnings.
(Reporting by Alejandro Lifschitz and Karina Grazina in Buenos Aires and Braden Reddall in San Francisco; Writing by Caroline Stauffer; Editing by Carol Bishopric)