The state-run oil companies of Bolivia and Argentina, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) and YPF, signed a contract on Monday to jointly explore and drill an area in the Charagua area of Bolivia's Santa Cruz province.
If the project is deemed commercially viable, the companies will invest around $1.177 billion and form a joint venture in which the Bolivian company will have a 51-percent stake, CEO of YPFB, Guillermo Acha, said in a statement.
Over an area of 99,250 hectares, Charagua is believed to have 2.7 trillion cubic feet of natural gas, and an expected maximum daily output of 10.2 million cubic meters. The contract is valid for 40 years and needs to be approved by Bolivia's congress, Acha said.
"It is a pleasure to have achieved this important step in the link we have with YPFB. For YPF, exploration is a strategic and fundamental element that will generate new investment projects to sustain the supply of natural gas to Argentina, "said YPF president Miguel Angel Gutiérrez.
The estimated oil revenue for the state in the lifetime of the project is $12.368 billion.