BP seeking more investment opportunities in Argentina shale

CHICAGO (Bloomberg) -- BP Plc would rather invest in Argentina’s shale oil fields than in Texas’ Permian basin, the U.S. drilling hot spot, CEO Bob Dudley said.

BP is seeking to buy more assets in Argentina’s Vaca Muerta shale fields, which have "enormous potential," Dudley said in a Bloomberg Television interview Tuesday on the sidelines of the Argentina Business and Investment Forum in Buenos Aires. He said the government there has improved the investment appeal of the country by helping foreign companies cut through red tape.

“I’m really encouraged by what I see,” Dudley said. “There’s a lot of future here.”

The London-based oil producer said it would make any further investments through its joint venture, Pan American Energy LLC. Pan American is 60% owned by BP Plc and 40% by Bridas Corp., a partnership between the billionaire Bulgheroni brothers and China’s CNOOC Ltd.

U.S. Permian basin shale assets are too expensive for BP right now, Dudley said. The Permian’s low production costs, extensive infrastructure of terminals and pipelines, and its oil-rich geology have made it the favored spot for many producers who are competing to snatch up drilling acreage there, ratcheting up purchase prices.

Dudley said he sees oil prices staying around $50/bbl for the remainder of 2016. In the long term, the company will be transitioning more toward natural gas production over oil, he said.