Both companies ratified their commitment with the shale oil project they initiated in 2015 in La Amarga Chica, in the Province of Neuquen. The start of the second stage of the works was decided considering the positive results of the first one. This second stage would demand approximately US$ 192 million. The agreement was sealed in the offices of YPF in Buenos Aires, with the attendance of the Vice-president of Strategy and Development Fernando Giliberti, and the Vice- president of International Assets of Petronas and President of the E&P unit in Argentina, Chen Kah Seong.
The first stage of the project was developed between May 2015 and September this year, with a total investment of US$ 165 million. It involved the drilling and set for production of nine wells, the construction of surface facilities and 3D seismic of the block.
For this new stage both companies expect to drill ten horizontal wells and the construction and completion of new works and facilities to transport the shale oil production that is obtained. Adding this second stage would increase the total investment up to US$ 357 million.
THE GOVERNMENT EXPECTS TO APPROACH GRADUALLY TO INTERNATIONAL PRICES.
While at some point it appeared that the Government was going to abruptly take the price of the domestic bbl. to international prices, it has actually opted for a more gradual exit from the domestic prices scheme. In this sense, the Ministry of Energy, Juan Jose Aranguren, stated to the union leader Guillermo Pereyra, and executives of YPF, PAE and Total, that the President Macri is in favor of matching the domestic bbl. prices with the Brent, which is the one applicable in most international oil transactions.
This is in line with YPF expectations. The CEO Miguel Ángel Gutiérrez proposed that domestic prices should be decrease at an average of one dollar per month until it achieves Brent values in a lapse of eight or nine months (September 2017).
Other government officials (among them the President of the Central Bank Federico Sturzenegger and the Ministry of Finance Alfonso Prat-Gay) would be claiming for an immediate convergence after January 1, 2017. This would lead to a decrease of Medanito bbl prices from USD 63 to USD 47, while Escalante bbl would decrease from USD 52 to USD 40. This 30% decrease could imply an important shrink of oil investments, and multiple layoffs.
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