August 2, 2012 (TSR) – Argentina’s state-run oil company YPF plans to seek Chinese partners for developing large shale resources in the southwest of the country, a government official said Wednesday.
YPF general manager Miguel Galuccio will join a government-led mission to China in September, Argentine Planning Minister Julio De Vido said.
He spoke after meeting in Buenos Aires with Zhang Xiaoqiang, the vice director of the Chinese National Development and Reform Commission.
Galuccio participated in the meeting along with De Vido, who is the government’s chief energy strategist, and Deputy Economy Minister and YPF director Axel Kicillof.
The visit will allow the Argentine government to move forward “with a series of projects,” De Vido said after the meeting in a recorded interview posted on a government website.
These include plans to secure “the participation of Chinese oil companies in the exploration and exploitation of the Vaca Muerta formation in Neuquen, where there are important reserves of gas and oil, in association, of course, with our flagship company YPF,” De Vido said.
Argentine President Cristina Fernandez de Kirchner in June met in Buenos Aires with Chinese Premier Wen Jiabao, when both agreed that their countries would work together on potential projects in nuclear energy, hydropower and the production of fertilizers and hydrocarbons, among other things.
YPF, which came under state control in May after the expropriation of 51% of the shares from Spain’s Repsol, is seeking financing for a plan to invest $35 billion through 2017.
The company wants to arrest a 6% annual decline in oil and gas production so that output grows by the same pace.
Galuccio has said the focus of the investment will be on squeezing out more from mature fields and developing shale resources, thought to be the third-largest for gas in the world after the US and China. Most of the shale potential is thought to be in Vaca Muerta in the southwestern Neuquen Basin, the country’s biggest source of conventional gas and second for crude.
YPF also is sounding out Chevron, ConocoPhillips, ExxonMobil and others as potential partners, and this week inked a deal to work closer with Venezuela’s state-owned PDVSA.
China’s CNOOC and Sinopec have acquired assets in the Argentine oil industry over the past few years at a time when investment is picking up on expectations for large shale potential. Sinopec is the fifth-biggest oil producer in Argentina, with a 5.9% share.
YPF is the biggest player, producing a third of the oil and 23% of the gas.