Pdvsa aims at Argentinean shale gas reserves

The nationalization of Argentinean state-run oil company YPF has led to a closer relation with Venezuelan state-run company Pdvsa in the light of the political alliances between Buenos Aires and Caracas.

The recent entry of Venezuela into the Common Market of the South (Mercosur) paved the way for Argentinean President Christina Fernández de Kirchner and Venezuelan President Hugo Chávez to sign a new "strategic agreement" between YPF and Pdvsa, allowing the Venezuelan oil company to engage in the development and production of shale gas in Argentina, whose shale gas reserves are the largest in South America amounting to 774 trillion cubic feet (TCF).

Argentinean accumulated natural gas reserves stand at 13.4 TCF. Domestic gas consumption in 2009 amounted to 1.52 TCF roughly, meaning that the country is able to meet its demand, as the records of the US Department of Energy reveal.

Considering Argentinean current natural gas demand, the country's reserves will be enough for the next 10 years only, yet Argentina will be able to rely on its shale gas and shale oil reserves in the near future.

For its part, Venezuelan gas consumption is just 46% of the volume of the Argentinean demand, highly induced by the industrial and automobile sectors.
Venezuelan domestic market demand hit nearly 0.71 TCF ending 2009, while production stood at 0.65 TCF.

Engaging in Argentinean shale gas and shale oil projects, specifically that in Vaca Muerta deposit may be a great opportunity for Pdvsa, an issue that was addressed during the meetings held with YPF early this week.

It is worth mentioning that the recoverable 774 TCF of Argentinean shale gas reserves triple those of Brazil, which has the second largest oil reserves (226 TCF).

Moreover, the US Department of Energy reveals that as well as the US, Canada, Mexico, China, Australia, Libya, or Brazil, Argentina holds shale gas reserves for over 200 TCF and it has a reliable natural gas infrastructure to meet domestic demand or for export.

Nevertheless, shale gas and shale oil still face high production costs amid controversies related to the environmental impact of the techniques used for the recovery of hydrocarbons in shale gas and shale oil formations.

Translated by Jhean Cabrera