After more than a decade of unparalleled growth in the United States and Canada, the shale gas and oil boom is hitting the rest of the world. As far as investors are concerned, there will be some significant opportunities for equipment, production and technical service companies. In Argentina, a deal was just made to develop one of the world’s largest shale oil and gas deposits. Readers can see here how the deal will impact global oil prices and availability.
A Roadmap to Prosperity
At first, the EIA (Energy Information Administration) spurred much of the interest in shale oil with its major survey. However, the survey is problematic, as it didn’t include much of the world. According to preliminary calculations, Argentina is home to one of the world’s top shale gas and oil reserves. With subsequent calculations from the EIA, investors and oil companies now have a better idea of what these deposits look like.
The Shale Oil Market in South America
After Mexico’s most recent presidential election, PEMEX has been faced with additional restructuring requirements. While the prospect of opening a monopoly to foreign contracts is enticing, the political consequences are complex. Argentina has several basins that show signs of being great producers, and the country’s government has taken control of 51% of YPF S.A. shares, effectively nationalizing the company. While the move was made to centralize policymaking rather than to impede the formation of foreign contracts, delays are still noticeable.
A Big Find
In what is seen as a significant development in Western Hemisphere shale oil and gas, Chevron has entered into a joint project with YPF. The target area is a basin known as Vaca Muerta, which is thought to hold the equivalent of over 23 billion barrels of oil. The news sent YPF shares up significantly, but investors should be wary because the contract is almost guaranteed to face litigation. The nationalization of YPF came at the company’s former owner’s expense. Repsol S.A used to own YPF, and it plans to sue over the seizure. Chevron indicates that it will move forward, but investors should wait until the case is resolved.