<article><p class="lead">Argentina's state-controlled YPF and Malaysia's state-owned Petronas signed a four-year $2.3bn agreement to fully develop a shale oil pilot project in the Vaca Muerta formation.</p><p>The two firms aim to produce 60,000 b/d of oil equivalent (boe/d) at the YPF-operated La Amarga Chica block by 2022, YPF said. Output is currently 9,800 boe/d.</p><p>Investment in the 50:50 joint venture is expected to total $590mn next year, Argentina's energy ministry said.</p><p>The companies estimate that the 20-year lifespan of the project could require an investment of $7bn to eventually produce 75,000 boe/d.</p><p>The investment would boost YPF's oil production by 30pc in 2022 from its current level of 227,000 b/d. Argentina currently produces a total of around 525,000 b/d. </p><p>This marks the third unconventional project that YPF will take to full development along with Loma Campana, a joint venture with Chevron, and El Orejano with US petrochemical firm Dow.</p><p>"This is one of six projects we hope will get started next year and will get us closer to our proposed goal of doubling oil and gas production by 2023," energy minister Javier Iguacel said.</p><p>YPF and Petronas first sealed a $550mn upstream shale oil agreement for La Amarga Chica in December 2014.</p><p>The first well was spud in May 2015, and since then a total of 33 wells have been drilled. Output is expected to double next year to 20,000 boe/d, according to Iguacel.</p><p>The project, which will require four drilling rigs and one crude processing plant, will generate some 2,000 jobs, according to the finance ministry. </p><p>"We are proud of the solid relationship that we've established with Petronas throughout the three pilot phases in which we surpassed the proposed objectives," YPF chairman Miguel Gutierrez said.</p></article>
