Chevron Corporation, the second-largest energy company by market value, will invest in Argentine shale oil and natural gas fields by bringing dollars into the country and exchanging them at the official rate, said state-run YPF SA.
In a presentation of the $1.24 billion shale partnership with Chevron yesterday, YPF Chief Executive Officer Miguel Galuccio said the San Ramon, California-based company won’t use pesos held in Argentina to fund the investments.
“It is a myth Chevron will use pesos,” Galuccio said. “Chevron will bring real dollars and will sell those dollars in the official market.”
In Argentina’s illegal street market the U.S. dollar costs about 9.33 pesos, compared with the official rate of 5.61.
Chevron’s initial $300 million payment to YPF for wells drilled will arrive “sooner than people can imagine,” Ali Moshiri, the head of Latin America, Middle East and Africa for Chevron, said at the presentation.
The remainder is expected to arrive during the next 10 to 12 months in accordance with the pace of the shale operations, he said.
Yesterday, the Chevron-YPF venture received final approval from Argentina’s southwestern province of Neuquen to develop the Vaca Muerta formation, which holds the world’s second-largest deposit of recoverable shale gas.
YPF’s plan submitted to Neuquen’s legislature specifies the venture will drill 115 wells expecting output of 11million barrels of oil in the first year.
After the first stage ends, Chevron will have an option to continue the accord, which encompasses as much as $16billion in spending, until 2048.
From the second to 35th year, the venture would drill 1,562 wells to produce 782 million barrels at a rate of 23.7 million of barrels a year on an investment of $15.4 billion, according to YPF’s plan.
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