August 28, 2018 / 9:03 PM / 3 months ago

Argentina re-ignites labor deal to spur investment in Vaca Muerta

BUENOS AIRES, Aug 28 (Reuters) - Argentina relaunched a one-year-old agreement between the government, companies and workers on Tuesday to drive competition and spur development in the Vaca Muerta shale play, the government said in a statement.

The original agreement, signed just over a year ago, sought to boost production by incentivizing competition among oil and gas drillers in the region. The government is now looking to bring in other business sectors like construction and mid-stream service providers.

“We are not going to stop until we export $30 billion in gas and oil from Vaca Muerta,” President Mauricio Macri told employees of state-controlled energy company YPF during a meeting with them in the southwestern province of Nequen.

Argentina is trying to double production in the region, aiming to pump 260 million cubic meters of gas daily within five years, the government said in the statement. Of that, 100 million cubic meters per day would be destined for international markets, according to the government’s plans.

YPF presented its proposal to small and medium-sized businesses involved in the oil and gas supply chain earlier this year, in an effort to drive competition, the statement said.

“We want to increase production by 100 to 130 fractures per month, which can be achieved by working with unions and supply companies,” YPF President Miguel Gutierrez said.

YPF, with its partners, has invested $8.4 billion in the region. It is the leading investor in Vaca Muerta, one of the largest non-conventional oil and gas formations in the world.

In June, companies in Vaca Muerta increased oil production by 5 percent compared with the same month last year. Gas production increased 8.2 percent over the same period, according to data from the Energy Ministry. (Reporting by Eliana Raszewski Writing by Scott Squires Editing by Leslie Adler)

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