Argentina's YPF and Petronas of Malaysia sign $550M deal to develop Patagonia shale oil field

Argentina's state-run energy company YPF SA has signed a deal with Malaysia's Petronas to develop massive deposits of shale oil and gas in Patagonia.

The deal was signed Wednesday. Petronas will provide $475 million of an initial investment totaling $550 million for a pilot phase scheduled to start early next year in the so-called Vaca Muerta deposit.

Vaca Muerta, in the remote eastern province of Neuquen, is believed to be among the world's largest deposits of shale oil and gas. In the pilot phase, the partners plan to drill 35 horizontal and vertical wells using hydraulic fracturing in a section of Vaca Muerta known as the Amarga Chica Block.

The deal comes amid a slump in global oil prices and a recession in Argentina.