BUENOS AIRES, Nov 7 (Reuters) - Petróleo Brasileiro SA, Brazil’s state-run oil company, will invest $622 million in shale gas production in Argentina’s Neuquen province, near the massive Vaca Muerta formation, Neuquen’s provincial government said on Friday.
The investment will be made over the next few years, according to a statement posted on the provincial government website.
“There will be a total of 24 wells in the Rio Neuquen area,” Neuquen Governor Jorge Sapag said in the statement.
The wells will be drilled in the Punta Rosada formation.
Last month Argentina adopted an investment framework aimed at attracting oil companies to shale deposits estimated to be so large they could transform the outlook for the energy supply in the Western Hemisphere. The deposits are found mostly in the Vaca Muerta (Dead Cow) formation in Neuquen province, in the western end of the country.
Shale oil and gas along with conventional deposits trapped in shale formations currently account for 8 percent of Argentina’s hydrocarbons output, according to Argentine oil company YPF SA.
The Argentine government has had trouble attracting foreign investment due to economic problems including high inflation and sovereign debt defaults in July and October.
Chevron Corp, Petronas, Royal Dutch Shell Plc and Total SA have dipped their toes in, but their initial investments will do little to help wipe out Argentina’s energy deficit, estimated at $7 billion this year.
Officials with the Brazilian company, known as Petrobras, were not immediately available for comment.
The company’s $221 billion five-year investment plan is one of the largest corporate spending programs ever and its $140 billion in debt makes it the most indebted of any major oil firm.
Petrobras Chief Executive Officer Maria das Graças Foster said in February the company wanted to boost oil exploration and production activities in Argentina. (Reporting by Walter Bianchi in Buenos Aiores and Caroline Stauffer in Sao Paulo; Writing by Hugh Bronstein; Editing by Richard Lough and Jeffrey Benkoe)