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Argentina’s 51% state-owned oil and gasoline firm YPF SA is aiming to sanction a large-scale LNG export venture by mid-2025, with the primary 1-2 million metric tons/yr (mmty) of liquefaction capability on-line by 2027, the agency’s new administration mentioned.
“Our aim is to change into a world LNG participant via the large monetization of our shale gasoline sources by deploying a large-scale LNG facility in Argentina,” mentioned CEO Horacio Marin throughout a name to debate fourth quarter 2023 earnings.
The decision was Marin’s first since being appointed to the highest job by Argentina’s firebrand libertarian president Javier Milei, who took workplace in December.
The thought behind liquefied pure gasoline exports is to seize worth from the Vaca Muerta Shale in Argentina’s Neuquén Basin.
“It’s well-known that Vaca Muerta has world-class gasoline reserves, far exceeding native demand,” Marin mentioned. “To seize this chance and lock in our shale potential, we plan to steer the distinctive Argentinian LNG venture.”
Plans are to deliver an current floating LNG facility with 1-2 mmty of capability to the nation by 2027.
The second stage would comprise two new floating services with capability of 8-9 mmty, to start operation by 2030, Marin mentioned. Past 2030, the corporate plans so as to add onshore liquefaction capability, finally bringing the whole venture to 15-20 mmty.
YPF and Malaysian nationwide oil firm Petronas signed a memorandum of understanding in 2022 to collectively discover the potential for an LNG export venture.
“We count on to personal 25% of the whole LNG capability,” Marin mentioned. YPF’s Maximiliano Westen, vice chairman of technique and new companies, added that YPF might be on the lookout for “further companions” on the venture.
The feedback come amid a droop in international pure gasoline costs, with U.S. benchmark Henry Hub having languished beneath $2/MMBtu for the final month.
Argentina additionally has a historical past of tectonic coverage shifts when new governments take over, casting additional uncertainty on the nation’s LNG ambitions.
Ramping Up Vaca Muerta
Pillars of YPF’s new technique embody returning to worldwide capital markets, rising shale oil exercise and divestment from sure mature fields.
The corporate plans to ramp up shale oil manufacturing by 24% in 2024, and to divest round 50 typical blocks at present producing about 90,000 b/d oil and 6.5 million m3/d of pure gasoline. The agency plans for capital expenditures to be round $5 billion this yr, with roughly $3 billion designated for shale improvement. Capital spend this yr might be 75% weighted to grease, whereas for pure gasoline, “we could have additional spend within the mid-term,” based on Marin.
The CEO mentioned, “I’ve the agency dedication to take YPF to the subsequent stage by rising constantly in a worthwhile manner and change into a web exporter of vitality in the long run, all the time sustaining a prudent monetary technique whereas maintaining the security and sustainability of our operation on the forefront of our day-to-day selections.”
‘A Very Difficult Yr’
CFO Federico Barroetaveña, for his half, famous that 2023 “was a really difficult yr pushed by a posh native macroeconomic surroundings with excessive inflation, sturdy volatility and a downward development in worldwide costs. On this context, the corporate was in a position to develop whole manufacturing for the second consecutive yr, deploying its annual CapEx plan whereas preserving a wholesome monetary place.”
He highlighted the corporate’s new pricing technique, which is supposed to cut back the hole between home fossil gas costs and worldwide benchmarks. Previous administrations have closely sponsored home gas and electrical energy costs to various levels.
Devaluation of the Argentine peso, considered one of a number of reforms imposed by Milei upon taking workplace, has brought about home meals and vitality costs to spike.
“For the reason that finish of the yr, the brand new pricing technique of the corporate elevated native gas costs up 6% sequentially in greenback phrases or passing the sturdy devaluations recorded on common throughout the interval,” Barroetaveña mentioned.
He added that, “Going ahead, though it’s onerous to foretell, principally because of the volatility in worldwide costs, the corporate nonetheless must protect costs, aiming at narrowing the hole and compensating for the evolution of the Argentine peso. We’ll pursue this goal contemplating the fragile equilibrium that must be maintained and the impression on the demand capacity to afford gas price inside the native macroeconomic context.”
YPF pure gasoline manufacturing averaged 34.4 million m3/d in 4Q2023, down 3.9% yr/yr attributable to decrease home demand. Shale gasoline accounted for about half of output at 17.0 million m3/d, up 5.3% yr/yr. Standard and tight gasoline manufacturing fell by 12.6% and eight.4%, respectively, versus the year-earlier interval.
Shale accounted for 48% of whole hydrocarbon manufacturing within the fourth quarter, in comparison with 18% in 2019, “representing a considerable transformation of our manufacturing metrics over the past 5 years,” mentioned Westen.
YPF recorded a web lack of $1.86 billion in 4Q2023, versus earnings of $464 million in 4Q2022. Full-year web losses totaled $1.28 billion in 2023, in comparison with a revenue of $2.23 billion in 2022.
The publish Argentina’s YPF Aiming to Turn into ‘International LNG Participant,’ Says New CEO appeared first on Pure Gasoline Intelligence
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