YPF details phased, Vaca Muerta-focused plan to grow company
State-owned Yacimientos Petrolíferos Fiscales (YPF), the largest oil and gas operator in Argentina, has outlined a plan to grow the company with a focus on the Vaca Muerta formation.
The four-phase plan aims to quadruple the company's value in the coming years. In addition to reinforcing its shale formation operations, the company plans to divest mature conventional assets with high operating costs. The plan is based on a model by Brazil’s Petrobras, which has increased its market value through presalt development.
YFP president and chief executive officer Horacio Marín, in information provided to Argentine media, said the company must lead Vaca Muerta development to drive the rest of the industry to generate around $30 billion (US)/year in hydrocarbon exports by 2030.
Four phases
Initially, the plan calls for acceleration of Vaca Muerta development, where YFP will concentrate the bulk of its investments. YPF said full development of Vaca Muerta will require drilling 10,000 wells at a cost of $140 billion (US). Today, lifting cost for shale is 60-80% below that of conventional development.
YPF also plans to withdrawal from conventional operations, a process currently under way in the province of Santa Cruz with the reversal of 10 mature areas. In addition, dialogue has been initiated with the governors of Chubut, Mendoza, and Neuquén to advance plans to divest from certain assets with high operating costs. Partnerships YPF holds with private operators also will be reviewed, the company said.
Currently, YPF's upstream portfolio is comprised 50-50 of Vaca Muerta and conventional assets. The goal is to move to an 80-20 portfolio of Neuquén shale and traditional fields, respectively.
In phase three, YPF said it will work to improve operational efficiency, both upstream and downstream.
Phase four aims to develop a large-scale LNG project, led by YPF in consortium with the large national gas industry companies. Marín said the aim is to build on LNG progress made with Petronas to incorporate more companies that could allow LNG exports to begin in 2027. The goal is for YPF and Petronas to maintain a 50% interest, with the remaining 50% to be held by a future consortium.
Vaca Muerta South pipeline
As part of the plan to increase its export profile, YPF will seek cooperation with other Neuquén basin producers in Vaca Muerta OIL Sur—the 600-km oil pipeline in Rio Negro territory from Allen to the Atlantic coast of Punta Colorada—as it aims to open a new export terminal from the basin.
The pipeline project, which includes construction of a storage beach and a loading terminal with two modern single-point moorings for large tanker ships, is expected to cost $2.3 billion (US) and increase Vaca Muerta crude oil export capacity by about 400,000 b/d in its initial stage with the goal to reach about 800,000 b/d when pumping stations are built.
Camilo Ciruzzi | South America Correspondent
Ciruzzi is a journalist based in the Argentine province of Río Negro. He has over 30 years of experience in radio and print media. Ciruzzi studied Communication Sciences at the University of Buenos Aires and specialized in energy, political economy, and finance.