YPF and Petronas, the state-controlled companies from Argentina and Malaysia, respectively, have signed a $550 million joint venture to develop unconventional oil resources in the Vaca Muerta shale formation.
YPF chief executive Miguel Galuccio and his Petronas counterpart Shamsul Azhar Abbas met in Kuala Lumpur and signed the deal that will underwrite the development of La Amarga Chica, a 187-square-kilometre area.
Cash-strapped YPF will commit $75 million in investments to a 30-well pilot programme to include horizontal drilling, and Petronas will invest $475 million, YPF said in a statement on Thursday.
The pilot should be launched by the first quarter of 2015 and could be expanded to a five-year $1 billion investment, depending on results, YPF said.
The Vaca Muerta shale beds span 30,000 sq km, making it one of the biggest potential unconventional plays in the world, with an estimated 23 billion barrels oil equivalent.
Most of YPF’s progress on Vaca Muerta so far has taken place on the 290-sq-km Loma Campana area, where a joint venture with Chevron has been in place since 2011.
"Petronas has world class standards and will help us develop our vast shale oil and gas resources," Galuccio said in a statement.
The former Schlumberger executive spent part of his career in Malaysia and knows Petronas well.
Petronas will likely tap into the shale expertise of Canada's Progress Energy Resources, which the Asian giant bought for $5.2 billion in 2012. Progress has been successful developing the Montney shale in British Columbia.
The signing ceremony comes one week after YPF signed a co-opearation agreement with Sinopec Argentina, outlining plans to engage in exploration and production activity in a mature oil producng area of Mendoza province, known as La Ventana.
"Both companies are seeking to promote new projects that will include 3D seismic surveying, exploration and production well drilling, and the construction and reconditioning of treatment and injection plants for more than $300 million," YPF said.
YPF retained a 70% stake in the venture on 480-sq-km area that has 239 producing wells and 70 injection wells and produces roughly 6000 barrels of crude per day at present.