Argentina's state-owned energy giant YPF said Friday it has signed an agreement with Bridas to exploit oil shale deposits with an initial investment of $1.5 billion over two years.
Under the deal, the companies would develop the non-conventional Bajada del Anelo and Bandurria fields in the Vaca Muerta ("Dead Cow") formation in the western province of Neuquen.
The fields cover an area of 663 square kilometers (256 square miles). The plan calls for beginning exploration in 2013 and drilling 130 wells through 2014.
"YPF will hold the title over the area, and both companies will share exploration and exploitation costs, as well as technology and know-how," a statement said.
Bridas Energy Holdings owns a 50 percent stake in Bridas Corporation, a strategic alliance with China National Offshore Oil Corporation, a global oil firm that specializes in the offshore exploration and production of hydrocarbons.
Vaca Muerta, which spreads across 30,000 square kilometers, is considered one of the largest oil shale deposits in the world.
The site places Argentina third, behind the United States and China, among 32 countries listed in a US Energy Department study of unconventional hydrocarbon resources.
YPF is the leading oil producer in Argentina, accounting for more than 35 percent of the market share in oil and gas.