Norway's state producer Statoil is entering Argentina for the first time, having agreed terms of a 50-50 partnership with Argentina’s leading energy company YPF. they said August 25. The upstream deal is focused on the Bajo del Toro block in the Neuquen Basin onshore Argentina. 

They signed a preliminary term sheet in Geneva the previous day, signatories being Statoil’s executive vice president for exploration Tim Dodson, and state-owned YPF’s vice president for business development and development engineering, Sergio Giorgi.

The terms of the 50-50 partnership involve Statoil covering YPF's past costs incurred in the block and also to pay for all of "certain future activities".

"This is a light oil exploration project in a world-class unconventional resource play, the Vaca Muerta formation. The opportunity has an excellent fit with Statoil’s sharpened strategy, and is in line with our exploration strategy of delivering profitable, high-quality resources,” said Dodson.

“Bringing in a new international player like Statoil into the country shows confidence in Vaca Muerta as a promising shale play and in YPF as a leading operator. We are pleased to expand the co-operation between both companies,” said YPF chairman Miguel Angel Gutierrez.

The Bajo del Toro exploration permit covers an area of 157 km² (38,800 acres), in the west-central part of Argentina. The Vaca Muerta formation is the main target in the basin. In the next few months, the parties will conclude the final agreements. Prior to closing of the deal, the agreements have to be approved by the Neuquen provincial authorities.

In 2016, Statoil signed a technical study agreement with YPF to map exploration opportunities in a large area of the continental slope offshore Argentina.

Vaca Muerta is expected to host major deposits of tight oil (shale oil) and shale gas. According to the US Energy Information Administration, the formation contains 16.2bn barrels of tight oil (shale oil) and 308 trillion ft³ of shale gas. Several international and domestic companies are involved in phased developments of the resource in cooperation with YPF that are expected to require billions of dollars of inward investment.

William Powell