* In final stages of negotiating deals with two partners-CEO
* Not concerned about Repsol lawsuit against Chevron-YPF
* Argentine government's gas price rise will help company
* Plans to tap bond market for up to $500 mln next year
By Sarah Young
LONDON, Dec 7 Argentine energy firm YPF
is close to inking two partnership deals, putting it
on the right t r ack to meet its investment goals and bring huge
shale gas resources onstream months after it was nationalised.
YPF chief executive Miguel Galuccio said on Friday he
expected the company to finalise a deal with U.S. oil major
Chevron and one with Argentine company Bridas Holding
before the end of the year.
"We are progressing with two companies. One is Chevron and
the other is Bridas. We are now in the final stages of the
commercial discussions," Galuccio told an investment seminar in
YPF says it needs to invest over $30 billion in the next
five years, $4.5 billion of which is to come from strategic
partners, to help pay to develop Argentina's huge shale oil and
Finalising one of the deals would be the first major
investment in YPF since Argentina's left-leaning government
seized a majority stake in the company from Spanish oil firm
Signing of commercial terms between YPF and Chevron, which
Galuccio said would be agreed before the end of the year, would
build on an accord the two signed in September and against which
Repsol has filed a U.S. lawsuit.
Galuccio said he was "very confident" that the legal threats
to YPF's deal with Chevron would not impact it, adding that it
was not something he was concerned about.
"The issue between Repsol and the Argentinean national
government has nothing to do with YPF," he said.
"There's no claim that Repsol can do to freeze or stop the
development of the company."
LURE OF SHALE GAS
The partnership deals with both Bridas and Chevron will
focus on YPF's extensive shale gas and oil resources, which
include the mammoth Vaca Muerta ("Dead Cow") formation in
southern Argentina, thought to hold an estimated 23 billion
barrels of oil equivalent.
Galuccio did not specify how big the deals with the two new
partners would be, but estimated the area on which Bridas was
looking to partner would cost an initial $2 billion to develop,
with the full development of the block costing $10 billion.
"It's a farm-in type of agreement where they (the partner)
will carry YPF for a few years," he said.
So-called "farm-in" deals enable a company to take a share
of an oil or gas block in return for funding a portion of the
exploration and development costs.
Bridas Holding's owner Carlos Bulgheroni, a South American
oil mogul, told Reuters on Thursday that his company was
considering making a substantial investment in YPF. Asked if the
investment would be in the range of $500 million, he said, "much
Bridas Corp., half owned by Bridas Holding and half by
China's CNOOC, holds 40 percent of Argentina's Pan
American Energy. The remaining 60 percent is held by BP.
YPF's $30 billion plus investment costs for the next five
years will be helped by a rise in wellhead gas prices recently
announced by the Argentine government to attract foreign
investment into shale gas.
"This will help the bottom line," Galuccio said, calling the
new gas price of $7.50 per million British Thermal Units "very
competitive", and adding that it would help bring about a "step
change" in investment in gas in Argentina.
The company will also seek funding from the international
bond market, Galuccio said, announcing plans to tap the market
for up to $500 million in the first or second quarter next year.