Energy giant Wintershall, Germany's largest producer of crude oil and natural gas, will invest $3.35 billion to drill for oil in southern Argentina, sources here said Tuesday.
Under the 10-year deal, Wintershall, which is owned by BASF, will search for shale oil in Vaca Muerta, one of the world's largest non-conventional petroleum reserves.
Jorge Sapag, governor of Neuquen province, where the Vaca Muerta oil field is located, signed letter of intent in Germany on Monday.
The vast Vaca Muerta oil field, which was discovered in 2010 by Spanish oil company Repsol-YPF, covers an area of 30,000 square kilometers, with estimated reserves of 22.5 billion barrels of oil.
Debt-ridden Argentina is eager to develop its own sources of energy, so that it can achieve energy self sufficiency.
Buenos Aires last year spent $12 million to import oil, and expects to make similar energy outlays in 2013.