Argentina's YPF says billions needed to revive output
BUENOS AIRES |
BUENOS AIRES (Reuters) - Argentina energy company YPF (YPFD.BA) needs to invest $7 billion a year to boost flagging natural gas and oil output by more than 25 percent in five years, officials at the renationalized company said on Tuesday.
Center-left President Cristina Fernandez seized control of YPF from Repsol (REP.MC) in April and blamed the Spanish oil major for years of inadequate investment that made the country increasingly reliant on pricey imports.
YPF, in a report sent to Buenos Aires Stock Exchange, said its plans would require an annual investment of $7.0 billion between 2013 and 2017 - most of which would come from the company's own resources.
"The decline of both oil and natural gas under Repsol-YPF accounted for 80 percent of the country's total production loss," said Chief Executive Miguel Galuccio - a former executive at global oilfield services giant Schlumberger Ltd.
"YPF needs to recover its leadership and vision in the country," he said in a speech to launch the corporate plan, vowing to make the company "professional and competitive."
Galuccio said 1,000 wells would be drilled next year - a level not reached by the company since 1996 - as the company aims to push up annual energy production by 6 percent.
That would represent a 26 percent increase by 2017 to reach 216 million barrels of oil equivalent (boe), bolstering current flows by rejuvenating mature oil fields and starting to tap hefty shale resources.
YPF, which registered a net profit in 2011 of 5.3 billion pesos ($1.1 billion), did not give more details about how it would be able to meet the estimate of required investment to reverse Argentina's energy shortfall.
"We're going to have to go out and look for partners. For that reason, we're designing business models that allow us to accommodate different types of partners," Galuccio said.
Soon before Fernandez announced the YPF takeover, Repsol said it would cost $25 billion a year to develop the world-class shale find that has drawn interest from international oil companies despite jitters about the investment climate.
Argentina remains shut out of global credit markets a decade after staging the biggest sovereign debt default in history. Analysts say that means YPF's chances of stepping up production and developing the Vaca Muerta shale resource may hinge on its success in luring deep-pocketed partners.
Tuesday's report said the exploitation of just 15 percent of Vaca Muerta would cover the country's energy deficit, which forced the import of $9.3 billion in fuels last year.
Hydrocarbons output has been in decline for years in Latin America's No. 3 economy at a time of strong demand.
Crude production fell 5.9 percent and natural gas output slipped 3.4 percent last year as power demand rose 5.1 percent, according to the latest figures from the Argentine Institute of Petroleum and Gas.
YPF's proven reserves of crude and natural gas - which do not include the new shale finds - fell 15 percent and 31 percent, respectively, between 2007 and 2010.
(Additional reporting by Helen Popper and Alejandro Lifschitz; editing by Andre Grenon)
- Tweet this
- Share this
- Digg this