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BUENOS AIRES, Dec 2 (Reuters) - Argentina's vast Vaca Muerta shale oil and gas formation remains viable despite sinking world oil prices, Miguel Galuccio, head of state-controlled energy firm YPF, said on Tuesday.
The government needs production at Vaca Muerta to increase enough to erase the $7 billion a year the country spends on energy imports. But the government's interventionist policies and bad credit history have put the brakes on much-needed foreign investment.
Adding to the uncertainty, U.S. light sweet crude prices settled at $66.88 per barrel on Tuesday, down 40 percent since June.
The price fall in itself is not a problem for Vaca Muerta, Galuccio told an industry conference. "Vaca Muerta is not at risk at all," he said.
"The best way to compete with oil prices is to be more competitive," Galuccio added. "Rather than it costing $7 million to drill a well, it could instead cost $3.5 million in a couple of years.
"This is what will liberate us from the pressure of oil prices. We have to bet on our competitiveness."
In the shadow of the Andes Mountains, the Vaca Muerta shale formation covers 30,000 square kilometers, an area roughly the size of Belgium.
Reporting by Eliana Raszewski; writing by Hugh Bronstein; Editing by Peter Galloway