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Dow, YPF agree to negotiate Argentina shale JV
10:05 AM MDT | April 1, 2013
Argentine oil-producer YPF and Dow Chemical are negotiating a joint venture to develop shale gas in Argentina.
YPF has signed a memorandum of understanding (MOU) with Dow Argentina, granting Dow “the exclusive right to negotiate the final terms and conditions under which YPF would assign 50% of its interest in the El Orejano area,” according to a letter YPF sent to the Buenos Aires stock exchange.
The El Orejano area is a 41 sq-kilometer region in the province of Neuquén. In a Spanish-language press statement, Dow Argentina says that the jv’s initial goal will be the development of the first shale gas pilot project in Argentina. The two companies will also investigate the development of petrochemical projects in Argentina based on the availability of raw materials.
According to Jorge La Roza, south region leader of Dow Latin America, the agreement strengthens the competitive position of Dow, consolidates its relationship with YPF, and reflects Dow’s commitment and contribution to the economic and industrial development of Argentina.
The agreement with Dow is YPF’s third shale deal since the company was nationalized in April 2012. In early December, Chevron signed a letter of intent aimed at a $1-billion pilot project, and later in the month, Argentina’s Bridas International entered negotiations on a $1.5-billion project.
Spanish oil company Repsol had owned a controlling 57% stake in YPF, but the Argentine government expropriated all but 6%, arguing that Repsol had neglected the business. Repsol is seeking $10 billion in compensation through the courts. It has also sought to prevent other companies from partnering with YPF, bringing lawsuits against both Chevron and Bridas.