U.S. energy giant Chevron Corporation has announced plans to invest more than $1.6 billion to develop shale reserves in Argentina, following a renewed agreement signed with Argentinian state-owned oil company YPF S.A.

Chevron will be taking part in shale development projects in the country through its subsidiaries, which have been working together with YPF on exploring and developing "one of the most exciting shale plays in the world," said George Kirkland, vice chairman of Chevron Corporation.

Argentina is estimated to hold significant shale reserves, which could rank the country among the top producers of shale oil and gas, according to data from the Energy Information Administration. Under the new agreement Chevron's subsidiaries and YPF will continue their joint efforts to develop shale oil and gas deposits in the Vaca Muerta formation. Last year Chevron and the state-owned company completed a pilot program for drilling over 160 wells. The companies aim to drill a further 170 wells during the next stage of the shale development, located across a 96,000-acre area at the Narambuena area in the Neuquén Basin.

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Chevron has long-term plans for operations in Argentina, with a planned total investment of $15 billion. The partnership between the U.S. giant and the Argentinian company aims to reach daily output of 50,000 barrels of shale oil and 3 million cubic meters of shale gas by drilling a total of 1,500 wells, according to Bloomberg.