Chevron And YPF Announced Their Intentions To Discuss A Strategic Alliance For The Exploration Of Shale Resources In Argentina

Author:Mr Carlos Alfaro, Pedro Mazer and Natalia Artman

Argentina's state-controlled oil company is holding important meetings with California-based Chevron Corp. to share strategies for developing the world's third-largest unconventional oil and gas reserves.

YPF CEO Miguel Galuccio is calling his talks with Chevron's Latin America chief Ali Moshiri the first step toward a strategic alliance with Chevron, Latin America's leading private energy investor. He says YPF needs partners with Chevron's power and experience to develop Argentina's shale reserves, which trail only the U.S. and China in potential.

The encounter between the two executives did not lead to any specific investment news, but sets the stage for Galuccio's formal presentation next Thursday August 30 of a five-year plan for the company Argentina expropriated from Spain's Grupo Repsol.

YPF said Mr Moshiri had expressed interest "in associating with YPF on an unconventional cluster ... in Vaca Muerta" and the talks with Chevron were "the first concrete step towards an alliance that will be strategic along the path that YPF's president and CEO is leading".

Chevron said it would not comment "on any confidential discussions we hold with officials".

Mr Galuccio in June unveiled a taster of his five-year strategic plan that called for investment of $7bn a year to reverse falling production. Partnerships will be key to funding what he called the "ambitious but realistic" plan, which includes drilling 1,000 wells.

Argentina is believed to be home to the world's third-biggest reserves of unconventional oil and gas, largely in the Vaca Muerta formation in the western province of Neuquén. To develop them, the company has appealed for deep-pocketed partners - and they have proved hard to find amid a toughening regulatory environment.

YPF is expected to seek to test investor appetite soon and has filed plans to sell $760m under a previously announced bond sale program. No details have been released.

Chevron, with large investments in Latin America and plenty of experience in shale, would be an ideal partner for YPF. The US major is already involved in shale in Argentina and plans to drill three wells in the Vaca Muerta formation this year and 120 conventional wells in the Neuquén basin over the next three years.

The two executives also discussed co-operation in projects to squeeze more production out of mature fields in Argentina. Mr Galuccio presents his strategic plan for YPF on August 30.

The CEO of Argentina's state-controlled oil company...

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