The formation, which is about the size of Belgium, has already seen investments from Chevron and Exxon.
High production costs and absence of labor flexibility have remained as obstacles for the exploration of the Vaca Muerta, oil major executives told Reuters.
Under the new pact, the country will extend a subsidized price of $7.50 per million British thermal units of natural gas extracted at new wells through the end of this decade.
The Argentine government said in a statement that the price is “indispensable for attracting long-term investment.”
As part of the deal, companies including YPF, Chevron, Total, Royal Dutch Shell and BP unit Pan American Energy will invest $5bn in the formation this year, President Mauricio Macri said in a televised address.
YPF chairman Miguel Gutierrez said that the company plans to invest $2.3bn in Vaca Muerta in 2017.
Gutierrez was quoted by MercoPress as saying: “These measures will allow us to boost development of unconventional resources in the country and promote investments to generate the energy that Argentina needs to grow.”
Argentina has assessed that Vaca Muerta would require total long-term investment of $200bn to pull the country's out of sustained energy shortage.
According to the US Energy Information Administration, Vaca Muerta holds 308 trillion cubic feet of shale gas and 16.2 billion barrels of shale oil.
