Vista will be entitled to an 80% share of the production from the wells

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Vista Oil & Gas will be the operator of the wells. (Credit: mhouge from Pixabay)

Vista Oil & Gas and Trafigura Argentina will jointly invest around $250m to develop 20 oil wells in the Bajada del Palo Oeste block in Vaca Muerta shale basin in Argentina.

The parties have set up an un-incorporated joint venture in this connection. Initially, the plan is for jointly developing five pads of four wells each in the block.

Vista Oil & Gas has been operating the Bajada del Palo Oeste block for more than two years.

It is the first time that the Argentine oil and gas company has entered into a strategic agreement with another firm to expedite the development of its main shale oil block.

Vista Oil & Gas had started development of the block in the second half of 2018 and presently has 28 wells on production. The company is said to have marked nearly 550 new well locations in the Bajada del Palo Oeste block.

Trafigura Argentina, which is a subsidiary of Swiss commodity company Trafigura, will invest nearly $75m. Of this, it will pay $25m for acquiring a participating stake of 20% in the production of the wells that are part of the agreement.

The remaining amount will be for the contribution of 20% of the investment needed for developing the wells.

Vista Oil & Gas will be the operator of the wells and will be entitled to an 80% share of the production from the wells. The company has agreed to cover 80% of the investments for the Vaca Muerta development.

Vista Oil & Gas president and CEO Miguel Galuccio said: “This agreement further validates the performance of our company and the excellence of its management team, which has allowed us to lead the development in Vaca Muerta and to be the partner of choice of a global company for the development of shale in Argentina, with safe, efficient and sustainable operations.

“It will also help to generate more production, and thus continue to expand energy exports that are essential for generating foreign exchange that the country needs, whilst preserving and always supplying the local market.”

Under the terms of the same agreement, the Argentine company has committed to supply 380,000 barrels per month of crude oil for a period of 18 months from July 2021 through December 2022 to Trafigura.

The crude oil will be supplied to the latter’s Bahía Blanca refinery in Argentina.

Trafigura Argentina general manager Martin Urdapilleta said: “This alliance allows us to strengthen our business in Argentina and integrate the supply of crude oil for our refinery and the subsequent supply of fuels for our network of service stations, wholesale clients and the export market to neighboring countries.

“Our strategic agreement with Vista will contribute to the development of Vaca Muerta, continuing its operational excellence and compliance with the highest safety and environmental standards.”