Argentine state oil company YPF on Monday signed a 40-year natural gas exploration contract with Bolivian counterpart YPFB for an area with reserves estimated at 2.7 trillion cubic feet.
YPFB’s chief executive officer, Guillermo Acha, and YPF CEO Miguel Angel Gutierrez inked the deal for the Charagua block at a signing ceremony in La Paz.
Charagua is located in the eastern province of Santa Cruz and covers an area of 99,250 hectares (383 sq. miles).
Acha said the contract must be approved by the national legislature, both houses of which are controlled by leftist President Evo Morales’ MAS party.
Gutierrez hailed the signing of the agreement, saying it was a strategic decision by YPF to participate in investment projects that can sustain the supply of natural gas to the Argentine market.
In a statement, YPFB said that if YPF finds natural gas at the Charagua block the Argentine company’s investment outlay for exploration and production would climb to nearly $1.8 billion and the two companies would form a joint venture in which the Bolivian state-owned firm would have a 51 percent stake.
In the event natural gas is found, daily production would be roughly 10.2 million cubic meters (359.5 million cubic feet), while the Bolivian government would earn an estimated $12.4 billion over the lifetime of the project, YPFB said.
Bolivia’s government is engaged in an intense exploration effort to boost natural gas reserves, which in 2016 totaled 11 trillion cubic feet and will last until 2023 at the latest at the current rate of consumption.
Bolivia, whose energy industry has been under state control since 2006, exports natural gas to Brazil and Argentina.