After signing a deal with nationalized YPF in June, US super major Chevron has invested US$1.24bn to develop the Loma Campana subsection of Vaca Muerta. The 132-well shale oil pilot program is on schedule to be completed in March 2014. More than 1,500 wells would be drilled during a second US$16bn phase of development, with production expected to reach 50,000b/d oil and 3Mm3/d gas.
In September the local unit of Dow Chemical signed a deal with YPF develop shale gas on the El Orejano block of Vaca Muerta. The chemical company has adopted an innovative vertically integrated way to secure gas supply for its plants in Argentina.
Neuquén provincial oil and gas company GyP signed a letter of intent (LOI) with German firm Wintershall in September to invest US$108mn in Vaca Muerta shale exploration. Over the next two years Wintershall-led exploration will focus on the Aguada Federal block of the Aguada del Chañar area. GyP is expected to sign an E&P deal for the same play with Brazil's Petrobras in the near future.
In December Azabache Energy and Rio Bravo Commercial Enterprises (RBE) entered into an agreement whereby RBE will pay US$5mn for a 23.76% interest in the Covunco Norte-Sur block in Argentina's Neuquén basin. Proceeds will be used for fracking on the block, according to Azabache.
At the beginning of December Argentine President Cristina Fernández met with the head of China's CNOOC Li Fanrong and Carlos Bulgheroni, head of Grupo Bridas, CNOOC's Argentine JV partner. This presidential meeting could signal an impending deal after a US$1.5bn MOU between Bridas and YPF for Vaca Muerta expired earlier this year as Repsol threatened legal action against partnerships with YPF in the wake of the expropriation of its stake in the firm.
Repsol is expected to halt legal action over the expropriation if a definitive agreement is reached with Argentine authorities, which could pave the way for more partnerships with YPF.
Over US$1.5bn worth of Vaca Muerta partnerships have been announced in 2013. With the entrance of new players, the development of untapped areas and signs of an end to the conflict with Repsol, this figure should continue to grow.
Argentina continues to cast a keen eye on progress in the US, where the rapid emergence of shale and tight oil has spawned job growth while reducing fuel imports.
Given the lack of unconventional technology and know-how among local firms, and their difficulty in accessing competitive financing, joint ventures are key to Vaca Muerta's development.
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