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  HOME | Main headline

YPF-Chevron Accord OK’d Amid Protests in Argentina
The legislative approval clears the way for Chevron to spend the first $300 million of a planned $1.24 billion outlay for the drilling of 115 wells using the method of hydro fracturing, or fracking

BUENOS AIRES – The legislature of the southern Argentine province of Neuquen on Thursday approved a decree granting state-controlled oil company YPF and U.S. energy supermajor Chevron Corp. the right to develop non-conventional hydrocarbon reserves in the Vaca Muerta formation, even as opponents of the tie-up clashed with police.

By a vote of 25-2, the legislature gave the green light for the agreement for the first large-scale development of shale oil and gas reserves within Vaca Muerta.

The decree – signed July 24 by Neuquen Gov. Jorge Sapag – awarded the rights to develop Vaca Muerta’s General Mosconi area to YPF and Chevron.

The legislative approval clears the way for Chevron to spend the first $300 million of a planned $1.24 billion outlay for the drilling of 115 wells using the method of hydro fracturing, or fracking.

Fracking is a controversial method that involves pumping a pressurized fluid – usually composed of water, sand and chemicals – into a shale formation to create a fracture in the rock layer and release trapped petroleum or natural gas.

The debate in the regional legislature lasted more than eight hours amid violent protests outside that left eight people seriously injured, one of whom suffered a gunshot wound.

Union members, political organizations and indigenous groups oppose the development of Vaca Muerta due to concerns about environmental damage and other reasons.

Opposition legislators tried unsuccessfully to postpone the debate due to the incidents, while Neuquen’s public employees called a strike for Thursday.

The YPF-Chevron accord, the details of which have not been disclosed, initially calls for the development of a 20-sq.-kilometer (7.7-sq.-mile) section of Vaca Muerta’s Loma La Lata Norte-Loma Campaña area, where 15 drilling teams are already in place and producing some 10,000 barrels of oil equivalent per day.

Full development of the 395-sq.-kilometer area covered under the agreement will require the drilling of some 1,500 additional wells with a goal of reaching daily production of 50,000 barrels of oil and 3 million cubic meters of associated natural gas by 2017.

Vaca Muerta spans a total of 30,000 sq. kilometers (11,580 sq. miles), of which YPF owns the rights to 12,000 sq. kilometers.

The Argentine government seized control of YPF when lawmakers approved a bill in May 2012 to expropriate a 51 percent stake in the energy company from Spain’s Repsol, which retains a minority stake in its former unit. EFE


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