Chevron to Invest More than $500 Million in Argentina's Vaca Muerta

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Researched by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Chevron Corporation (NYSE:CVX) (San Ramon, California) plans to invest more than US$500 million to develop its El Trapial Field in Vaca Muerta, Argentina.

On Friday, Argentina's Ministry of Economy announced the investment following a meeting between the economy minister, Sergio Massa, energy minister, Flavia Royo, and Chevron's representatives in Argentina.

According to the statement, the investments will start flowing to Argentina in July.

At the same meeting, the ministry agreed to add the El Trapial Field to 2014's Decree 929, which "provides the right to freely commercialize 20% of the production of liquid and gaseous hydrocarbons produced in the projects reached in the foreign market, with a rate of 0% export duties."

Chevron holds all stakes in the El Trapial Field, which covers 450 squared kilometers. The field completed appraisal drilling activity in 2020 and found its first oil in October of the same year. It produced about 4,400 barrels per day (BBL/d) of oil in April, though Chevron seeks to expand its operations by investing millions in this area.

Besides El Trapial, the energy company has a 50% non-operated interest in the Loma Campana and Naramnbuena fields, in the Neuquen province of Vaca Muerta. YPF operates both oil fields.

Loma Campana is one of the largest oil fields from YPF or Chevron, and it had an oil production of almost 76,000 BBL/d in April this year.

Besides upstream assets, Chevron holds a 14% interest in the Oleoductos del Valle (OLDEVAL). This 900-kilometer pipeline transports oil from Vaca Muerta to Buenas Aires state, passing by the Neuquen, La Pampa and Rio Negro provinces. OLDEVAL transports 90% of the oil produced in the Neuquen province.

Over the years, Argentina has promoted the development of Vaca Muerta by attracting investments from major international companies for its expansion. Vaca Muerta is the world's second-largest shale reservoir and the fourth-largest for non-conventional oil.

More importantly, Vaca Muerta could be a significant source of foreign currency for Argentina through oil and gas exports. Amid high inflation and foreign currency reserve depletion, higher oil and gas production exports are key for the national government.

Finally, Vaca Muerta's development potential is significant. Projections by Rystad showed that Vaca Muerta's oil output could reach 1 million BBL/d by 2030.

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