The Argentina government has signed an agreement with energy companies YPF (state-owned), Chevron, Total, Shell and BP unit Pan American Energy and with labour unions, as part of a plan to attract investors in the Vaca Muerta shale formation in Patagonia. Under the terms of the agreement, gas produced at new Vaca Muerta wells will benefit from a subsidised price of US$7.5/MBtu (around twice the front-month natural gas futures on the NYMEX) through 2020, to lure long-term investors.
Consequently, YPF has raised its investment forecast by 20-30% to US$2.3bn in 2017. So far, Chevron and ExxonMobil have expressed interest in the Vaca Muerta formation, which remains largely unexplored. Only two of the 19 concessions awarded in the area have started producing. The government bets on the development of Vaca Muerta resources, estimated at 16.2 Gbl of shale oil and 308 Tcf (nearly 8,700 bcm) of gas to reverse the energy shortage in the country.