Norway’s energy major Equinor has held early talks to sell stakes in Argentinian shale operations to Argentina’s state-owned oil firm YPF, its joint venture partner in the assets, Bloomberg reports, quoting an unnamed source with knowledge of the development.

Equinor, which entered Argentina in the 2010s, has both offshore and onshore interests in the South American country.

Onshore, the Norwegian oil and gas major holds interests in one exploration license and one producing block in the prolific Vaca Muerta shale formation, in the province of Neuquen.

Equinor’s partner in the joint venture, state firm YPF, has the right of first refusal in any stake sale, according to Bloomberg’s source.

The Norwegian firm appears intent on divesting stakes in its shale interests in Argentina as it has already launched a process to evaluate the assets, another source close to the plans told Bloomberg.

Equinor, like other European oil and gas giants, is betting on oil and gas again and cutting investments and targets in renewable energy, as it is “adjusting ambitions to realities” in the pursuit to grow cash flows and shareholder returns.

A sale of shale assets in Argentina suggests that Equinor may have found the Argentinian operations to be non-core to the business strategy.

In Vaca Muerta, interest in Argentina’s top shale play has increased since libertarian and business-friendly president Javier Milei took office a year ago.

But the new government has also announced an end to state financing for pipelines and other infrastructure projects. So companies have to rely on private investment and the new tax breaks and other incentives in the new free-market approach to the economy. They would also want to see capital and foreign currency controls lifted in the country before committing billions of U.S. dollars to developing export routes out of Vaca Muerta, analysts say.

By Charles Kennedy for Oilprice.com

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