* Forecast for potential resources hiked to 22.8 bln barrels * Shale prospect seen comparable to giant US shale fields * YPF shares close 8 percent higher after announcement By Helen Popper and Joshua Schneyer BUENOS AIRES/NEW YORK, Feb 8 (Reuters) - YPF, the Argentine arm of Spanish oil major Repsol, said its Vaca Muerta shale prospect holds 22.8 billion barrels of oil and gas resources, a staggering amount that may double Argentina's oil and gas output within a decade. The announcement sent YPF shares up 8 percent to 165.25 pesos ($38) on the Buenos Aires exchange. Following recent test-drilling, YPF said on Wednesday that oil and gas resources in its 12,000 square kilometer concession in southern Argentina's Patagonia region were much larger than previously thought. But it cautioned that developing the entire shale play could cost $25 billion per year. "If the exploration in the whole Vaca Muerta area is successful, and intense development work starts immediately, in 10 years Argentina's current oil and gas production capacity could be doubled," YPF said in a statement. Argentina pumped around 760,000 barrels per day (bpd) of oil and 4 billion cubic feet of gas per day in 2010, according to U.S. Department of Energy, which called it South America's top natural gas producer. The firm's previous, November estimate on Vaca Muerta, or "dead cow" in English, showed it held at least 927 million barrels of reserves in just a small sliver of the area YPF had explored so far. The latest estimate comes after new drilling, and extrapolates a much larger resource base over the entire area controlled by YPF. However, recovery rates for shale drilling are often just a small fraction of total resource estimates. Foreign oil companies have also been hesitant to dive headlong into Argentina's upstream oil sector, since the government imposes price controls on domestic sales of oil and gas. In recent years, it has loosened some restrictions in an effort to attract new investment. "They (YPF) are in the early appraisal well stage, so I'd be careful about drawing too many conclusions," said Sylvie D'Apote at Gas Energy consultancy in Rio de Janeiro. "But this is very good for Argentina." If confirmed by further drilling, the YPF find may bode well for other major oil companies with stakes in the broader Vaca Muerta area, which covers around 30,000 square kilometers. They include ExxonMobil, EOG Resources and Apache. Repsol estimated earlier that the hydrocarbons mix in the Vaca Muerta area included up to 80 percent oil and liquids, and about 20 percent natural gas. The oil is a prized light variety. YPF, which is majority owned by Repsol and pumps over half of Argentina's oil, started producing small volumes of crude from the shale play last year. Argentina's proved oil reserves -- a measure of how much crude could be readily tapped economically -- stood at 2.62 billion barrels as of 2009, U.S. Department of Energy data shows. It is far too early to determine how much of YPF's Vaca Muerta resources -- around nine-fold the size of Argentina's proved reserves -- might someday be added to the proved category, analysts say. But the shale play has already drawn comparisons to the giant fields, such as Bakken in North Dakota and Eagle Ford in Texas, that have recently allowed the United States to stem decades of oil production declines and become a net exporter of refined oil products. Mark Papa, the chief executive of EOG Resources, told a conference last year that Vaca Muerta could produce more oil than Eagle Ford, which has recently been pumping around 400,000 barrels a day. In a 1,100-square kilometer area YPF explored so far at Vaca Muerta -- about 10 percent of its total concession -- the company identified "contingent resources" of 1.525 billion barrels of oil equivalent, Wednesday's statement said. YPF, which has a market value of approximately $15 billion, said it would require capital from Argentina and foreign credit markets to tap Vaca Muerta. "I think they are saying that a lot of investment is required, and for that (the government) has to create the right (investment) security conditions in order to attract capital," said Buenos Aires-based oil analyst Victor Bronstein. "They are sending a political message." Due to fast-growing demand, the country has been forced to import more fuel to meet its needs in recent years and critics blame government intervention and political uncertainty for discouraging investment in exploration. YPF started work to develop shale resources in Argentina in 2007, announcing its first positive results last year, with a shale gas find known as Loma La Lata. Soon after that discovery, a U.S. Department of Energy report showed that Argentina holds more natural gas trapped in shale rock than all of Europe does - a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply. The shale prospects, or "unconventional reserves," could give Argentina a chance to turn around a sharp decline in production from its conventional oil and gas fields. Once a major oil and gas exporter, soaring domestic demand has turned the country into a gas importer and a barely self-sufficient oil producer in recent years.