Petrobras is looking for shale gas deals in Argentina’s prolific Vaca Muerta to boost production

(Bloomberg) — Brazil’s state-controlled oil and gas producer Petroleo Brasileiro SA (Petrobras) is seeking shale gas deals in Argentina, according to people familiar with the strategy, part of a larger plan to boost supplies of the fuel to spur industrial growth.

Among the assets in which Petrobras wants to acquire a stake is Tecpetrol SA, a subsidiary of Tecpetrol SA, the Techint Group owned by billionaire Paolo Rocca, according to the people who asked not to be identified due to the confidentiality of the matter.

Petrobras responded to questions by saying that the company’s five-year plan is to create value both in Brazil and abroad and replenish oil and natural gas reserves. Tecpetrol declined to comment.

Petrobras is aiming for international expansion, focusing in particular on oil and gas projects in Latin America and off the African Atlantic coast, rather than limiting itself to deep-water fields in Brazil.

Other major gas producers in Argentina’s vaunted Vaca Muerta shale field include state-owned YPF SA, TotalEnergies SE, Pampa Energia SA and Pan American Energy Group, which is 50 percent owned by BP Plc.

Petrobras sold its assets in Argentina several years ago, but retained a 34 percent stake in the Rio Neuquén shale gas field, a joint venture with YPF and Pampa.

New momentum at Vaca Muerta means Argentina could be exporting gas to Brazil as early as next year. But rather than just importing the fuel, Petrobras would also like to be involved in production, the people said.

Argentine engineers are working to reverse the flow of a key pipeline that Vaca Muerta’s drillers could use to send excess fuel to Sao Paulo via Bolivia. Bolivia has traditionally piped gas to its two neighbors, but its production is currently in sharp decline.

In August, Argentina granted Tecpetrol and TotalEnergies provisional authorization to export gas to Brazil, according to the province of Neuquén, which holds the largest share of Argentina’s shale oil reserves.

Government officials and industry managers are toying with the idea of ​​expanding another pipeline network to deliver the gas directly to southern Brazil, thus avoiding the detour via Bolivia.

expansion. Petrobras’ production is expected to peak around 2030 unless the company makes major discoveries or acquisitions. Vaca Muerta, often compared to the Permian Basin in the United States, could help.

The past decade has seen a series of shale failures due to Argentina’s difficult business climate. But pipeline expansion and deregulation under President Javier Milei are driving drilling investment and export plans. Production in the Neuquen Basin has reached seasonal highs of more than 1 million barrels of oil.

Brazil’s gas ambitions even trump political rivalry. President Luiz Inácio Lula da Silva has been trading barbs with Milei throughout the year as diplomatic relations between South America’s two largest economies deteriorate.

But in June, Lula met with Neuquén Governor Rolando Figueroa during an investment conference in Rio de Janeiro. This month, Lula also met with Petrobras CEO Magda Chambriard to discuss how to increase supplies and lower prices. Mining and Energy Minister Alexandre Silveira, on the other hand, proposes using gas to boost Brazil’s industry and manufacturing.