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Argentina and Venezeula Join in Oil Accord

Joint Oil Accord

Cristina Fernandez, president of Argentina, and Hugo Chavez, president of Venezuela signed an agreement in Brazil forming a strategic alliance between their respective state oil companies, Yacimientos Petrolíferos Fiscales (YPF) and Petróleos de Venezuela (PDVSA).

Under the accord, the two firms will increase cooperation in all areas, a partnership Chavez said, “is possible thanks to the fact Argentina recovered its sovereignty in the oil sphere,” alluding to the Argentine government’s seizing a controlling stake in YPF early in 2012 from Spain’s integrated global energy company, Repsol YPF S.A.

“We celebrated in Caracas when we learned about the (expropriation),” Chavez said, adding that the agreement will give YPF a presence in Venezuela’s massive Orinoco heavy-oil and tar belt- considered the world’s single largest hydrocarbon accumulation, while PDVSA “will continue its presence in Argentina.”

A joint statement released after the ceremony said the parties decided “to identify strategic participation schemes for joint planning across the hydrocarbon value chain, both in Venezuela and Argentina.”

The accord also covers the incorporation of PDVSA in projects to develop crude and gas deposits in Argentina, where huge shale oil and gas resources have been discovered recently.

Fernandez, for her part, hailed the “recovery of YPF” as a “historic moment” and she underscored the “great potential generated” by Venezuela’s formal inclusion as a full member of the Mercosur trading bloc, also made up of Argentina, Brazil and Uruguay.

Paraguay is a founding member of Mercosur, but its membership was suspended following the ouster of President Fernando Lugo in June of 2012.

“We have a lot of what the world needs most right now: energy and food,” Fernandez said.

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