("UPDATE: Argentina's YPF CEO Says Talks with Shale Partners
'Advanced'," at 12:06 p.m. EST referred to the incorrect Bridas
unit in the 2nd and 10th paragraphs. It should be Bridas Energy
Holdings Ltd., not Bridas Corp. The correct version follows.)
--YPF CEO says in advanced talks to develop shale oil and
gas
--Executive says deals with Chevron and Bridas close
--Company may seek $300 million to $500 million on international
bond markets next year.
By Sarah Kent and Shane Romig
Argentine state oil company YPF SA (YPF) is in advanced
discussions with potential partners on the development of its shale
assets, the company's chief executive said Friday.
YPF could complete a deal with Bridas Energy Holdings Ltd.
before the end of the year, while an agreement with U.S. oil major
Chevron Corp. (CVX) will likely close in the first quarter of 2013,
YPF CEO Miguel Galuccio said, adding that the deals would likely be
similar in size.
"With both Bridas and Chevron we are already quite advanced," he
said at a seminar in London.
Chevron signed a memorandum of understanding with YPF in
September to explore for unconventional energy in Argentina.
However, earlier this month, Spanish oil company Repsol SA
(REPYY, REP.MC) filed a suit in New York federal court attempting
to block Chevron from teaming up with YPF in Argentina due to
Argentina's nationalization of Repsol's controlling stake in YPF
earlier this year. Argentina accused Repsol of failing to invest
and bleeding the company dry with dividends.
Declining oil and gas output last year turned Argentina into a
net energy importer for the first time in almost 20 years.
On Friday, Mr. Galuccio said he was confident that legal issues
would not stand in the way of any agreement between the company and
Chevron.
"There is no claim Repsol can make that can freeze the
development of YPF per se ... We are not concerned and I think
Chevron is probably less concerned than us, otherwise they wouldn't
be investing in us," he said.
In addition, on Monday Repsol filed a case against Argentina at
the World Bank's arbitration tribunal, known as ICSID.
Argentina is also seeking to team up with Bridas Energy
Holdings, which runs Argentina's Pan American Energy through Bridas
Corp. and is the country's No. 2 oil and gas company.
Bridas Corp. is jointly owned by Argentina's Bulgheroni family,
through Bridas Energy Holdings, and China's Cnooc Ltd. (CEO,
0883.HK).
Argentina is currently on a major investment drive to develop
what could be massive unconventional oil and gas deposits.
Argentina ranks third in the world, behind China and the U.S.,
in potentially recoverable shale-gas reserves, with 774 trillion
cubic feet, according to a study last year by the U.S. Energy
Information Administration.
The Vaca Muerta shale formation in the Neuquen basin holds an
estimated 23 billion barrels of oil equivalent.
In addition to seeking partners, YPF is actively on the hunt for
financing.
YPF could seek to raise between $300 million and $500 million on
international bond markets as early as next year, Mr. Galuccio said
Friday.
"If the conditions are right we will go out with an
international bond towards the middle of the year," he said.
YPF has plans to invest $7 billion per year between 2013 and
2017.
Mr. Galuccio said recently that YPF can invest $24.7 billion
from its own pocket through 2017, with that investment rising to
$40.4 billion if the company can ink joint ventures.
Last week, the government more than tripled the price that YPF
can charge for new natural gas production to ensure it is
profitable to invest in gas production.
The new price, $7.50 per million British thermal units, is well
above the benchmark natural gas price of $3.65 in the U.S.
Write to Shane Romig at shane.romig@dowjones.com
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