Argentinian state-owned oil company YPF signed today a Memorandum of Understanding (MOU) with the Chinese giant Sinopec which confirms the two companies’ intention to form a join venture “that will cover different market segments, upstream and potentially downstream.”
Signed in Beijing by YPF CEO Miguel Galuccio and Sinopec Chairman Fu Chengyu, the agreement covers both conventional and unconventional exploration projects in Argentina.
Last August, Sinopec and YPF already agreed to “re-launch exploration and development activity” in the La Ventana area of the Vaca Muerta shale. The agreement followed similar arrangements with Chevron and Malaysia’s Petronas to develop the hydrocarbon-rich shale formation which is believed to hold between 16.2 and 22.5 billion barrels of oil and 308 trillion cubic feet of natural gas.
The Chinese company’s local unit, Sinopec Argentina Exploration and Production, and YPF have already begun a technical audit of some areas of Vaca Muerta that could be potentially explored and developed.
This is not the first instance of cooperation between the two companies as Sinopec already works with YPF in the Mendoza province on projects which inject more than USD 300m into the regional industry. They include the completion of 3D seismic surveying, the drilling of exploratory and development wells and the construction and refurbishment of treatment plants.
Miguel Galuccio said that the MOU is a “great step forward” that opens new possibilities for the long-term development of Argentine oil and gas resources within the “particular context” of the recent plunge in global crude prices.
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