HOUSTON (Reuters) - Investments of between $6 billion and $8 billion in Argentina’s Vaca Muerta shale field have been confirmed in 2017, Energy and Mining Minister Juan Jose Aranguren said on Wednesday.
The country expects between $12 billion and $15 billion in investments in 2018 and $20 billion annually from 2019 onward, he said. Aranguren and President Mauricio Macri sought to woo oil executives in meetings in Houston ahead of Macri’s trip to Washington to meet with President Donald Trump.
Roughly the size of Belgium, Vaca Muerta is one of the world’s largest shale gas reserves but has remained mostly undeveloped due to high production costs and a lack of labor flexibility.
Macri has sought to attract investment since taking office in late 2015, and earlier this year sealed a deal with unions and oil companies including Chevron Corp and Royal Dutch Shell Plc to guarantee investments in exchange for greater labor flexibility and wellhead price subsidies.
The uptick in investment would come as companies transition from pilot projects to the development phase, Aranguren told reporters. There are 700 unconventional wells drilled in Argentina, which Aranguren said would likely increase by a factor of 10 when projects move to development.
Aranguren added that next Tuesday, the government will sign another deal with oil worker unions, this time in the country’s Chubut province, to stimulate production in the San Jorge Gulf play.
“The goal of the deals with the unions is to push pilot projects into the development phase, to stimulate production to substitute imports,” Aranguren said.
Once a natural gas exporter, Argentina now imports around 25 percent of its needs, including some costly liquefied natural gas imports, a major contributor to its gaping fiscal deficit. That came after years of stagnant production as consumption remained high.
Of the 18 projects under way in Vaca Muerta just two - a joint venture involving state-owned YPF SA and Chevron, and one between YPF and Dow Chemical Co - have advanced to the development stage, Aranguren said, adding that a pilot project operated by Tecpetrol SA was close to reaching development.
Beyond Vaca Muerta, Aranguren said Argentina would grant permission to explore to any interested company. Firms that discover viable reserves would then have to seek approval from the relevant province to produce the oil.
That comes after Norway’s Spectrum ASA said last week it was conducting a seismic study of under-explored offshore areas with YPF.
Reporting by Marianna Parraga; Writing by Caroline Stauffer and Luc Cohen; Editing by Chizu Nomiyama and Matthew Lewis