Chevron Corporation (NYSE:CVX) signed a signed a memorandum of understanding (MOU) with Argentina’s state controlled energy company YPF SA (NYSE:YPF) to explore conventional and unconventional oil and shale gas in the Vaca Muerta basin, located in the province of Neuquen, Argentina.
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Argentina became the world’s third largest holder of recoverable natural gas reserves, after the discovery of the Vaca Muerta basin, a major shale gas formation. Experts estimate that the region has approximately 23 billion barrels of recoverable oil. Chevron Corporation (NYSE:CVX) and YPF SA (NYSE:YPF) wants to explore the available resources in the region, using advanced exploration technologies.

Chevron’s oil exploration agreement with YPF (NYSE:YPF) faced strong opposition from Repsol SA (PINK:REPYY) (MCE:REP), a Spanish oil company that currently owns a 12 percent stake in the Argentine energy firm.

Repsol SA (PINK:REPYY) (MCE:REP) owned a 57% stake in YPF through a bill known as Argenitina’s Hydrocarbon Sovereignty. This move leaves the Spanish oil company with only a 6 percent stake in YPD. Argentina President Cristina Fernandez de Kirchner said, the government’s hydro-carbon self-sufficiency program is a national interest.

On the other hand, the management of the Spanish oil company claimed that the actions of the Argentine government was “illegitimate” and “unjustifiable”, and demanded $10.5 billion compensation for their stake in the company. Repsol SA (PINK:REPYY) (MCE:REP) wants to block Chevron’s agreement with YPF through legal charges. Its aim is to prevent Chevron Corporation (NYSE:CVX) from gaining benefits from the properties sequestered by Argentina’s government.

Aside from Chevron, YPF also signed similar MOUs with other oil companies, including Exxon Mobil Corporation (NYSE:XOM) and Apache Corporation (NYSE:APA). According to Miguel Galluccio, chief executive officer of YPF, the company set a $37.2 billion investment plan until 2017, to increase its oil and natural gas production by 32 percent.

Last April, the Argentine government implemented the renationalization of the YPF SA (NYSE:YPF) and expropriated 51 percent of YPF from the Spanish oil company

Meanwhile, Chevron Corporation (NYSE:CVX) USA recently agreed to acquire Chesapeake Energy Corporation (NYSE:CHK)’s 246,000 net leasehold acres located in the Delaware Basin, which is part of the Permian Basin. George Kirkland, vice chairman of Chevron Corporation said, “This acquisition in a premier emerging play in the Permian Basin grows our significant leasehold position.” According to him, the liquids-rich unconventional assets in the area will serve as significant future contributors to the company’s North American operations.”

Chevron Corporation (NYSE:CVX) currently holds approximately 700,000 net acres in the Delaware Basin, which contains some oil and wet gas plays, including the Avalon Shale and the Bone Spring Sands