Argentina’s largest oil and gas producer, YPF SA, said Tuesday that a deep-water well it drilled off Argentina’s coast came up dry.
YPF invested about $150 million to develop the well in an area known as Cuenca Malvinas, located about 300 kilometers off Argentina’s southeastern coast near the disputed Falkland Islands.
“Initial data…do not show the presence of hydrocarbons,” YPF said in a statement.
YPF drilled the well at a depth of about 2,000 meters in “absolutely hostile climatic conditions,” including winds of nearly 180 kilometers an hour and eight-meter-high waves.
The well is part of YPF’s five-year nationwide oil and gas exploration program that began in late 2009.
“This is a historical milestone for the development of exploration in Argentina and will allow us to obtain information and elaborate a new geological map that will help future work in the area,” YPF said.
YPF drilled the well in collaboration with Brazil’s Petroleo Brasileiro SA (PBR) and Pan American Energy.
This is the third offshore well of its kind drilled by YPF over the past few years. The company plans to drill more offshore wells as part of its exploration program.
YPF is also actively pursuing exploration plans off the coasts of Colombia and Uruguay.
Argentina’s government has protested foreign exploration activities in waters to the north of the U.K.-controlled Falkland Islands, known locally as Las Malvinas.
The two countries fought a war over the islands in 1982.
But the government also has encouraged firms to explore offshore to boost Argentina’s declining oil and gas reserves.
Analysts say as many as 60 billion barrels of high-grade oil could be found in the 200-square-mile economic zone surrounding the islands. That could make the Falklands one of the world’s largest oil reserves, comparable with the North Sea, which so far has produced about 40 billion barrels.
The U.K. and Argentina have overlapping claims around the Falklands and have clashed over territorial rights at the United Nations. The U.K. wants to extend its rights to waters surrounding the Falkland Islands and also wants to lock in a vast tract of seabed off the coast of Antarctica.
Argentina has submitted its own claim at the U.N. for territory in the South Atlantic.
Meanwhile, exploration for oil and gas has been proceeding on both sides of the maritime divide.
On the U.K. side, Desire Petroleum PLC (DES.LN) and Rockhopper Exploration PLC (RKH.LN) have explored in the North Falkland Basin, north of Argentina’s Cuenca Malvinas.
Last week, Rockhopper said it is “wholly focused” on developing opportunities in the area.
YPF shares traded in New York rose 1.26% to close at $45.92 Tuesday.
-By Taos Turner, Dow Jones Newswires