Qatar Petroleum (QP) on Monday snapped up its first significant international stakes in unconventional oil and natural gas resources in an agreement with ExxonMobil Corp. to become an equity holder in the Vaca Muerta formation onshore in Argentina’s Neuquén Basin.
The Vaca Muerta Shale in western Argentina is considered among the most prospective unconventional shale oil and gas plays outside North America. An ExxonMobil subsidiary in 2011 secured a farm-out agreement with a subsidiary of Canada-based Americas Petrogas to explore an estimated 163,500 acres in the Los Toldos blocks in Neuquen.
The agreements were signed by QP CEO Saad Sherida Al-Kaabi and ExxonMobil CFO Andrew P. Swiger, which would give QP interests in Argentina affiliates ExxonMobil Exploration Argentina SRL and Mobil Argentina SA. The affiliates hold rights with other partners to use unconventional drilling techniques to explore seven blocks.
“This is an important milestone, as it marks Qatar Petroleum’s first investment in Argentina as well as its first significant international investment in unconventional oil and gas resources,” Al-Kaabi said at a press conference. “This agreement is an important milestone on the road to expanding our international footprint, which is an important part of Qatar Petroleum’s growth strategy.”
The Vaca Muerta agreement by the largest liquefied natural gas (LNG) exporter in the world “goes hand in hand with the planned expansion of our local production from the North Field, which would further boost Qatar’s leading global position by raising its LNG production” to 100 million metric tons/year (mmty) from 77 mmty.
QP, which supplies about one-third of the world's LNG, last summer lifted a decade-long moratorium on its North Field development to potentially increase LNG output. A petrochemicals project also has been launched for the region, which is to include the largest ethane cracker in the Middle East.
“This agreement builds on our long-standing and successful partnership with Qatar Petroleum, and underscores our commitment to develop Argentina’s resources to further support domestic production of oil and natural gas,” Swiger said.
ExxonMobil subsidiary XTO Energy, a world leader in unconventional oil and gas operations, is providing operational support to the two affiliates in Argentina, including developing detailed appraisal and development plans based on recently drilled wells and pilot production testing.
With government incentives and rising global demand, activity in the Vaca Muerta has been picking up by international operators and particularly Big Oil companies, including Argentina’s state-owned YPF SA and BP plc, Chevron Corp., Equinor ASA (formerly Statoil), and Royal Dutch Shell plc.
ExxonMobil and QP have been frequent partners on a variety of global projects. Their jointly owned Golden Pass Products LLC project on the Texas coast, with QP holding a 70% stake, has been approved to export up to 2.21 Bcf/d worldwide. The terminal would be sited near Sabine Pass in Jefferson County, TX.