Argentina governor courts Chilean investment in Neuquén province

Friday, December 5, 2014

The governor of Argentina's Neuquén province, Jorge Sapag, traveled to Chilean capital Santiago to court investment in the province's oil and gas industry and related sectors.

Neuquén leads Argentina in oil production and is home to the Vaca Muerta shale reserve.

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It is in the interest of both countries to invest in Neuquén, a provincial government release quoted Sapag as saying, in order for both to substitute costlier oil and gas imports from other countries.

Chile ramped up natural gas imports from Argentina during the late 90s and early 2000s, but as Argentina's oil and gas production fell and its domestic policies changed, those imports began to decline, according to the US Energy Information Administration (EIA).

Chile's current government has prioritized the use of LNG for power generation, and of substituting diesel-fired power plants with combined-cycle gas.

Sapag noted that 90% of Argentina's power generation comes from oil and gas and lamented that despite the country's vast hydrocarbon resources, it is a net importer of both.

Sapag highlighted existing transportation infrastructure along the over 600km border shared between Neuquén and Chile, which would facilitate increased exports to the latter.

Energy reforms passed by Argentina's congress are designed to attract investment in oil and gas development by creating a streamlined, national regulatory framework for the industry, he said. The reforms "create stable rules for national and provincial taxes, and for provincial royalties," Sapag added.

US-based super major Chevron and Argentine national oil company YPF have invested US$2.8bn in Neuquén's Loma Campana field, Sapag said, noting that total hydrocarbons investment in the province will reach US$5.1bn this year.

The Neuquén basin's unconventional reserves are considered the world's second most important in terms of natural gas and the fourth most important in terms of oil, Sapag said, citing the US government.

In the last few years, he added, advances in unconventional technology have allowed for increased exploitation of mature oil and gas fields over 100 years old in the province.