(Updates wth YPF CEO China trip in ninth paragraph)
Aug. 28 (Bloomberg) -- YPF SA and Petroliam Nasional Bhd., state-controlled companies from Argentina and Malaysia, signed a $550 million accord to develop shale oil at the world’s fourth- largest deposit in Vaca Muerta.
Miguel Galuccio and Shamsul Azhar Abbas, chief executive officers for YPF and Petronas, respectively, signed a deal to develop a 187-square kilometer area (72 square miles) at Petronas’s Kuala Lumpur headquarters today, the Buenos Aires- based producer said in an e-mailed statement. YPF will invest $75 million and Petronas $475 million to drill more than 30 wells in three years in southwestern Argentina. Depending on the results the program could be expanded to a five-year $1 billion investment, YPF said.
“We are in preliminary talks with others,” Galuccio said on a videoconference from Kuala Lumpur. “We will keep talking. There is no immediate rush for more joint ventures.”
YPF is seeking partners to develop Vaca Muerta, a formation the size of Belgium that contains at least 23 billion barrels of oil. Chevron Corp., the third-largest oil company by market value, signed a memorandum of understanding with YPF in August 2012 that 11 months later led to a development accord. Chevron’s initial Vaca Muerta investment in Loma Campana of $1.24 billion was later expanded to $16 billion.
“In line with our strategic plan and results obtained in Loma Campana, it appears to us a big opportunity for YPF and for Argentina to add Petronas as a partner,” Galuccio said in the statement. “Petronas has world class standards and will help us develop our vast shale oil and gas resources.”
YPF and Petronas may also develop offshore in the future as well as explore other fields in Latin America, Galuccio said on the videoconference.
The Petronas-YPF area called La Amarga Chica, or little bitter, is in Neuquen province. It is northwest of Loma Campana, the 290-square-kilometer area in the Vaca Muerta shale formation where Chevron is working with YPF.
YPF plans to buy 10 percent of the area from a provincial- owned company, Galuccio said. The venture is pending provincial approval for a 35-year concession, he said.
Galuccio will travel Aug. 30 to Beijing from Kuala Lumpur, a YPF official briefed on the trip said today, asking not to be named in line with company policy. Galuccio will hold meetings Sept. 1-2 with Cnooc Ltd., PetroChina Co. and China Petroleum and Chemical Corp. in a visit organized by China’s government, the official said.
Petronas also is expanding into Canada with the acquisition last year of Progress Energy Canada. Petronas bought Progress Energy for C$5.2 billion ($4.8 billion) after an initial rejection by the Canadian government.
YPF’s American depositary receipts slid 0.8 percent to close at $33.04 in New York. The ADRs have almost doubled in the past year.