27 March 2013 01:21 [Source: ICIS news]
MEDELLIN, Colombia (ICIS)--Argentina’s state-controlled oil company YPF said on Tuesday it has signed a memorandum of understanding (MOU) with the Argentine subsidiary of petrochemical major Dow Chemical to develop shale gas in Argentina.
YPF said the two parties would negotiate the final terms of a 50% joint venture for the development of the El Orejano block within the extensive Vaca Muerta shale formation in Neuquen, in the west of Argentina.
The agreement was sealed during a meeting between YPF CEO Miguel Galuccio and Dow’s southern South American regional director Jorge La Roza.
Under the terms of the agreement, the Argentine company and Dow would also work to identify new petrochemical projects, YPF said.
“We have found in Dow a very important partner,” said Galuccio.
The company “has shown maximum interest since talks began, and a firm commitment to be involved as direct actors in the transformation that the country is aiming towards in the development of non-conventional resources,” he added.
For Dow, the agreement could provide the company with a reliable and sustained supply of key raw materials.
“This agreement strengthens the competitive position of Dow, consolidates our relationship with YPF and reflects our commitment and contribution to the economic and industrial development in Argentina,” said La Roza.
Argentina is thought to have the world’s third largest shale gas reserves after the US and China, with an estimated 774,000 billion cubic feet (bcf) of recoverable gas, according to the US Energy Information Administration (EIA).
YPF is keen to partner with companies to develop this potential and by doing so reduce its dependence on expensive imported fuels.
However, after the expropriation of YPF from Spanish firm Repsol last year, potential partners have been cautious.
In December, YPF and US oil and gas major Chevron signed a $1bn (€780m) preliminary deal to explore shale gas and oil in Argentina.
However, the deal hangs in the balance after Chevron said early in March that it would not proceed further until a court freeze on the company’s $19bn worth of Argentinian assets had been lifted.
($1 = €0.78)
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