BUENOS AIRES, Aug 29 (Reuters) - A preliminary deal between Argentina's state-controlled energy company YPF and privately held Bridas International to jointly invest $1.5 billion to develop shale resources has expired, YPF's chief executive said on Thursday.
The memorandum of understanding (MOU) signed in December had come under legal fire in Spanish courts from Repsol SA, which lost control of YPF when it was nationalized in May 2012.
"Options remain open, but any MOU has a period of validity and that one expired a few months ago," said Miguel Galuccio, CEO of YPF, at a press conference.
The false start with Bridas underscores the importance of YPF's $1.24 billion deal with Chevron Corp to exploit the Vaca Muerta shale oil and gas formation, thought to be one of the biggest reserves in the Western Hemisphere.
Galuccio used the joint press event with Chevron to defend the contract they signed in July, which has come under fire in a heated election season. To get the deal done, Argentina loosened foreign exchange controls that have been central to the presidency of left-leaning Cristina Fernandez.
On Thursday, thousands of demonstrators took to the streets in the southern province of Neuquen to protest the legislature's approval of the Chevron deal. Clashes broke out with police, who used tear gas and rubber bullets to break up protests led by students, indigenous rights groups and workers' unions.
Environmentalists have filed a challenge in court to prevent drilling for gas using hydraulic fracturing, or fracking, citing international criticism of its effect on nearby aquifers.
Repsol has also pressed legal charges against Chevron.