Pan American Energy (PAE) of Argentina, a unit of BP, which has been extracting shale gas in the province of Neuquen since 2011, is expected to announce plans to invest $1.4 billion in exploring and producing Argentina’s conventional and unconventional energy reserves.
According to a company statement, PAE plans include a $900 million investment in Golfo San Jorge, mostly in the province of Chubut where it operates the country’s biggest oil field, and $300 million in the shale-gas-rich province of Neuquen. Additional $70 million will be invested in the area of Tierra del Fuego, with the remaining $130 million set aside for capital investments in the country, the company said.
Within the Chubut properties, certain amount of funds will go towards the development of the the Cerro Dragón oil field located in the San Jorge Gulf basin, which the company considers to be its main asset in the area with oil output of 98,000 barrels per day (bpd) in 2014 and the third largest gas producer in Argentina.
In the Neuquen province, the main areas of interest include the Lindero Atravesado block where the firm has been able to double its output, and is a partner at third and fourth largest gas production blocks in Argentina, Aguada Pichana, and San Roque, respectively.
“The investment will enable a balance in the activity, maintain jobs and carry out a sustainable development of the communities in which the company operates, considering the international context of the sector,” PAE said in a press release.
The investment was announced jointly by the head of PAE Marcos Bulgheroni and Argentine President Mauricio Macri, who talked of the challenges caused by the current low oil prices.
“The industry is seriously affected by the changes in oil prices. That’s a challenge for us. We have to prove we can keep on producing despite the price has dropped,” Macri said. “The energy sector has great opportunities to grow. We not only have to defend existing jobs but also create new ones.”
President Macri also spoke of Argentine’s impending energy crisis for which he blamed his predecessor former president Cristina Fernández de Kirchner.
“We have to lower our energy consumption. It will take between five and six years to have a sustainable and diversified energy matrix. There’s a long road ahead and if we can’t save energy, we may not grow at the speed we need,” Macri said.
The PAE’s announcement comes only weeks after Exxon Mobil disclosed that it may invest as much as $10 billion in the Argentine prolific shale formation Vaca Muerta. This would be on top of the $200 million the company had already invested in the basin which holds the world’s second largest shale deposits.
In 2013 the Energy Information Agency estimated the amount of technically recoverable shale gas reserves in Argentina at 802 trillion cubic feet and 27 billion barrels of technically recoverable shale oil. This means that Argentina is the world’s second and forth-richest country when it comes shale gas and shale oil respectively.
Despite these immense reserves the country lacks the know-how and the resources to fully capitalize on these deposits and is eager to attract foreign oil & gas investors.
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