BUENOS AIRES Pan American Energy has discovered an oil reserve in southern Argentina in one of the biggest such finds of recent years in the energy-hungry country, a provincial governor said on Saturday.
Buenos Aires-based Pan American, which is controlled by BP Plc (BP.L), is Argentina's second-biggest oil producer and it found the new reserve in the Patagonian province of Chubut.
"An oil reserve has been discovered in the Escalante basin that's twice as big as what Chubut has produced to date," said Chubut Gov. Mario Das Neves in a statement posted on the provincial government Web site www.chubut.gov.ar.
"By 2007, all the companies produced 60 million barrels, and this reserve ... represents almost double what they produce," he added.
Last year, Pan American and Chubut renegotiated the company's concession for the site where the new reserve was found, giving the firm another 10-year contract on condition that it invest in exploration.
Das Neves said the company invested $700 million last year and described the find as "the most significant reserve that's been discovered in recent years."
The discovery of new reserves is good news for the Argentine government amid energy shortages in Latin America's No. 3 economy.
Economic expansion at a rate of more than 8 percent for each of the past five years has strained energy resources after years of low investment to raise output and explore for new reserves.
During the Southern Hemisphere winter, the shortages forced the government to restrict supplies to industrial users.
(Reporting by Lucas Bergman; Writing by Helen Popper; Editing by Peter Cooney)