YPF and Malaysia’s Petronas have agreed to invest $2.3bn for the development of a shale oil project in the La Amarga Chica block in Argentina’s Neuquén province.
The investment in the La Amarga Chica project, located in the oil window of the Vaca Muerta shale play, will be made by the partners over the next four years to achieve an initial production of 60,000 barrels of oil equivalent per day by 2022.
For the Argentina-state owned energy company YPF, the project marks its second largest direct investment on unconventional gas production in Argentina.
The La Amarga Chica will be further developed with an investment of up to $4.7bn over 20 years to ramp up its production to 75,000 barrels equivalent through another phase of expansion.
The shale oil project is the third project that YPF will move to the stage of massive development, after the Loma Campana and El Orejano projects.
The partners have been exploring the shale oil potential of the La Amarga Chica block for three years or so and had invested $550m for the same.
A pilot project in the block had gone through three phases, starting from the first well drilled in May 2015. Eventually, 33 wells were completed leading to a production of 9,800 barrels of oil equivalent per day.
YPF board president Miguel Gutiérrez said: “We are proud of the solid relationship we have established with Petronas throughout the three pilot phases, in which we exceed the proposed objectives.
“This same link, together with the knowledge and experience acquired in the block, is what guarantees our success in the stage we are announcing today: the massive development phase of La Amarga Chica.”
In October 2017, YPF revealed its plans to invest over $30bn by 2022 to improve its oil and gas production capacity and also power generation capacity. The Argentine energy company said that it intends to record 150% growth in non-conventional oil and gas production by 2022.
Last month, YPF signed a 10-year agreement with EXMAR under which the latter’s Caribbean FLNG, a barge-based floating LNG liquefaction unit (FLNG), will be deployed to produce and export LNG from the Vaca Muerta shale play in the Neuquén Basin.