Argentina’s state oil and gas company YPF has confirmed that Shell and Chevron have completed legal formalities to secure stakes in the Vaca Muerta Oleoducto Sur SA (VMOS) midstream joint venture to develop and operate the $3 billion Vaca Muerta Sur export pipeline transporting oil from the Vaca Muerta shale fields to a new marine terminal on the Atlantic coast.
Shell Argentina S.A., Chevron Argentina SRL, and Argentinian independent Pluspetrol S.A. exercised options in December to claim equity in VMOS. They joined initial shareholders YPF S.A. and independents Vista Energy Argentina SAU, Pampa Energía S.A., and Pan American Sur S.A.
The 437-km Vaca Muerta Sur pipeline will transport 180,000 B/D when it enters service at the end of 2026. Throughput is planned to rise to 550,000 B/D in 2027 with a further capacity boost to 700,000 B/D possible after 2028, according to YPF.
Argentina’s Shale Oil Klondike
YPF reported its oil export revenues nearly tripled to $1 billion in 2024. Crude production grew 6% year-on-year to 257,000 B/D, and shale accounted for 122,000 B/D of that, a record 26% increase over 2023.
“We are reshaping our oil production matrix, leaving conventional mature fields and targeting to increase our shale oil production share from 50% to a minimum of 80%,” YPF’s CEO Horacio Marín told analysts at the company’s Q4 earnings call in March.
“In parallel (by VMOS to develop and operate the new export pipeline) we are … engaging and consolidating the effort of all major producers in Argentina to ramp up production to provide the forecast throughput,” Marín said.
On 13 March, the day after Shell and Chevron finalized their participation in VMOS, Argentina’s Minister of Economy Luis Caputo announced that Vaca Muerta Sur will be first to receive financial assistance under the Incentives Regime for Large Investments initiated by President Javier Milei in 2024.
EPCM Contract Awarded
Major contracts already awarded by VMOS include:
- An EPCM (engineering, procurement, construction, and management) award to Madrid-based engineering firm Técnicas Reunidas for the hydrocarbon storage and dispatch terminal at Punta Colorada.
- Another EPC award to CB&I for engineering, procurement, fabrication, and construction also related to the 630,000-m3 (4-million-bbl) capacity terminal oil storage facility. CB&I is based in The Woodlands, Texas.
The terminal’s storage facility will comprise five tanks with a 62,000 m3/D dispatch capacity through two monobuoys capable of loading very large crude carriers tankers.
In a news release in January, Técnicas Reunidas reported the contract value of $440 million of which “more than $70 million will correspond to engineering and project management services,” the release noted. “The total investment to be made by YPF and its partners for the full implementation of the terminal will be around $1.8 billion.”
With offices in Spain, Argentina, and Chile, Técnicas Reunidas, worked earlier to optimize YPF's conceptual engineering; the firm also helped upgrade YPF’s Luján de Cuyo refinery, its news release noted.
The Vaca Muerta Sur pipeline starts in the Neuquén Basin, connecting the Loma Campana oil field to the Allen pumping station in Río Negro province. From Allen, the pipeline travels to Chelforó and then to the coastal export terminal at Punta Colorada in Río Negro province.
Shell, Chevron: No Strangers to Argentina
Shell operates four license blocks in the Neuquén Basin: Cruz de Lorena and Sierras Blancas (Shell 90%); Coirón Amargo Suroeste (Shell 80%), and Bajada de Añelo (Shell 50%), according to Shell’s website.
The supermajor also claims a working interest in two blocks operated by Total Austral S.A. (La Escalonada and Rincon La Ceniza), Shell 45%, and the YPF S.A.-operated Bandurria Sur block (Shell 24.5%).
Chevron Argentina SRL owns and operates one concession covering 111,000 acres (450 km2) with both conventional production and Vaca Muerta Shale potential. Another Chevron subsidiary participates in the Loma Campana and Narambuena concessions, covering 73,000 net acres (295 km2) in Vaca Muerta, according to Chevron’s website.
Argentinian independent Pluspetrol acquired ExxonMobil Exploration Argentina in December 2024, absorbing the supermajor’s former assets in Vaca Muerta: Bajo del Choique-La Invernada, Los Toldos I Sur, Los Toldos II Oeste, and Pampa de las Yeguas, as well as a share in the Oldelval pipeline, according to a company statement.
In terms of Argentina’s technically recoverable shale reserves, the US Energy Information Administration reported 308 Tcf of gas (2nd globally) and 16 bbl of oil (4th globally) in its December 2024 country report.
For Further Reading
Vaca Muerta Shale Drives Argentina’s LNG Export Ambitions by Pat Davis Szymczak, JPT.
