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Chevron and Shell Eye Stake in Argentina's Vaca Muerta Project

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Chevron Corporation (CVX - Free Report) and Shell plc (SHEL - Free Report) are undergoing discussions about buying a stake in Argentina’s signature $3 billion Vaca Muerta Sur project to boost crude oil exportsfrom its promising shale fields. Both companies are in conversation with a consortium of companies led by YPF Sociedad Anónima (YPF - Free Report) to build a new transcontinental pipeline and a floating Atlantic terminal that would transform Argentina’s oil export potential.

Investment in the shale project by big oil players like CVX and SHEL, both carrying a Zacks Rank #3 (Hold) currently,would signify more foreign investments from companies around the globe, which were restricted till now due to Argentina’s restricted capital investment regulations.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

An Insight Into Argentina’s Vaca Muerta and Its Ambitious Project

The Vaca Muerta, known for playing a pivotal role in turning Argentina into a powerhouse of energy, has the second-largest shale gas reserve worldwide. The shale patch has the potential to cut back Argentina’s dependence on oil and gas imports.

The proposed pipeline under the YPF-led Vaca Muerta Sur project would transport half a million barrels of crude daily by late 2027, almost similar to existing transport capacity from Argentina’s Patagonian shale hub. The project already has backing from the Pan American Energy Group, which consists of BP p.l.c. (BP - Free Report) , holding a 50% stake in the group and other energy partners like Pampa Energia SA and Vista Energy. The consortium plans to finance 70% of the project through international banks, with partners contributing 30%.

Argentina’s Pro-Business Reforms to Attract Investors

Argentina’s President, Javier Milei, has been struggling to convince the big multinationals to invest in Argentina despite its business reforms because of the inherited strict regulations relating to currency and capital controls.

Now, the president is extending the key reforms to attract foreign investments. The key reform initiatives include 30-year exemptions to currency restrictions and tax breaks protected by law.

Meanwhile, with companies like Tenaris SA already set to deliver pipes by next year, the Vaca Muerta Sur project is poised to elevate Argentina's energy sector, drawing closer to its 20-year-old oil and gas production peak.

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