Argentina’s federal and provincial governments are working on a legal and regulatory overhaul for the oil and gas sector to spur development of the country’s large shale resources, a provincial governor said.
The overhaul will “fill the legal gaps” for the production of unconventional oil and natural gas supplies, Neuquen Governor Jorge Sapag said in a statement Thursday.
He said his administration is “working well” with the federal government on issues including granting longer licenses for unconventional resource projects, as well as providing more fiscal and tax stability, tax breaks and fiscal incentives.
“We have the obligation to provide stability for investment to come,” Sapag said.
Neuquen has become the focus of unconventional oil and gas drilling in Argentina since the discovery of huge potential in the Vaca Muerta play in 2010. Chevron, ExxonMobil, Shell, Total and other companies have started drilling for resources in the play, which is estimated to hold much of Argentina’s estimated 27 billion barrels of shale oil resources and 802 Tcf of shale gas resources, according to the US Energy Information Administration.
Chevron is making the biggest bet so far with a $16 billion partnership with YPF, Argentina’s state-run energy company, to develop a tract of Vaca Muerta where production reached 19,000 b/d of oil equivalent in the first quarter this year. The companies plan to produce more than 50,000 b/d of oil and 3 million cu m/d of associated gas as part of the project.
Sapag is due to meet Monday in Buenos Aires with other governors of oil-producing provinces to discuss the overhaul with President Cristina Fernandez de Kirchner.