Argentina will pay Repsol $5 billion in bonds as compensation for the nationalization of Argentine energy company YPF. In 2012, Argentinian government seized 51 percent of YPF from Repsol – it’s former parent.
The agreed compensation is an important move designed to send signals to international investors that Argentina is open for business. According to the US Energy Information Agency, Argentina sits on top of 802 trillion cubic feet of recoverable shale gas reserves, mostly located in its Vaca Muerta region. In the face of a weakened economy and high inflation, the country is eager to capitalise on these deposits.
Only this year, Chevron, the biggest energy player currently working in Argentina, plans to spend an additional $1.6bn and drill 170 wells to unlock shale in the Vaca Muerta.
George Kirkland, vice chairman of Chevron Corporation said “This is a significant step in our subsidiaries’ joint efforts with YPF to develop one of the most exciting shale plays in the world today. Vaca Muerta could become an important contributor to Chevron’s long term production growth.”
Overall, Chevron plans to invest $15 billion in Argentina and expects to drill 1,500 wells. Daily output is thought to reach 50,000 barrels of oil and 3 million cubic meters of gas by 2017.
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