CANCUN Mexico (Reuters) - It will take Argentina up to a decade and as much as $200 billion in investment to erase an energy output deficit, the chief executive officer of national oil company YPF (YPFD.BA) said in an interview on Friday.
CEO Miguel Galuccio expects the rate of output growth from Argentina’s massive Vaca Muerta shale formation, one of the largest such deposits in the world, to outpace average national oil and gas output growth of between 4 and 5 percent.
The company currently produces about 240,000 barrels per day of oil and about 43.5 million cubic meters of gas per day.
“It’s probably going to take between five and 10 years (to reach energy self-sufficiency). It will all depend on how fast we can go with the development of unconventional gas and the development of tight gas,” Galuccio said on the sidelines of an oil conference in the Mexican resort city of Cancun.
Tight gas is a kind of gas trapped in particularly dense rock formations.
The development of Vaca Muerta, a top YPF priority, has already attracted about 10 private companies that are drilling exploratory wells, but only YPF has produced oil and gas there so far.
YPF was nationalized in 2012 after the Argentine government seized the stake held by Spanish oil major Repsol (REP.MC). Argentina took a 51 percent stake in YPF while the rest is traded on the New York stock exchange.
Argentina began running energy deficits in 2011, a year before President Cristina Fernandez expropriated the firm citing Repsol’s insufficient investment.
Galuccio said natural gas output, the main source of the South American country’s energy shortfall, has risen by about a third from the second quarter in 2013 to the same period this year.
YPF’s cost of drilling vertical wells could drop by more than 20 percent over the next few years to around $5.5 million, he said.
While the company’s main focus is boosting oil and gas production at home, Galuccio said YPF may seek to invest in mature fields in Mexico following a major energy overhaul in that country earlier this year.
On Thursday, YPF signed a non-commercial memorandum of understanding with Mexico’s national oil company Pemex [PEMX.UL] and Malaysia’s Petronas [PETRA.UL].
Galuccio said YPF has taken on exploratory blocks in Bolivia and plans to drill an offshore well in Uruguay next year. The firm will “probably” sign a joint venture in Ecuador next week, he added.
An energy reform being debated by lawmakers in Buenos Aires “will definitely help” attract foreign investment, Galuccio said.
Argentina’s latest debt default earlier this year will not impact YPF’s ability to seal deals with other oil companies or negatively affect its upcoming 1.3 billion peso ($154 million) local bond issuance, Galuccio emphasized.
“We’ve been issuing local money all the time, so I think we will be able to raise that money with no problem,” he said.
(1 US dollar = 8.4485 Argentine peso)
Reporting by David Alire Garcia; Editing by Simon Gardner and Lisa Shumaker