Argentina’s YPF to focus on oil and gas exports from Vaca Muerta first, petchems projects later – exec

BUENOS AIRES (ICIS)–YPF is focused now on “monetising” its shale crude oil and natural gas reserves at the Vaca Muerta formation by exporting as much as it can, with petrochemicals projects potentially developed later, an executive at the Argentinian energy major said on Wednesday.

Ariel Andreucci, head of strategy and investments at YPF, said the sheer natural gas reserves at Vaca Muerta – estimated at 300 trillion cubic feet (tcf) (8.5 trillion cubic meters) – would allow Argentina to take an opportunity to develop its crude oil and gas industry by exporting it globally.

This could happen because Argentina’s consumption is projected at 1.5 tcf/year for decades to come, added Andreucci.

Vaca Muerta is a geologic formation from the Late Jurassic to Early Cretaceous eras in the Neuquen Basin in northern Patagonia, Argentina, and is the host rock for major deposits of shale oil and shale gas.

“Petrochemicals will continue to be a key consumer of crude oil and natural gas derivatives for years to come, well past 2050,” said Andreucci.

“Considering Argentina’s consumption is expected at 1.5 tcf/year, we would have reserves for 200 years. This would allow us to sell to overseas markets around 3 tcf/year in decades to come. It is a great opportunity for YPF but also for Argentina’s economy.”

Andreucci was speaking at an event organised by the Latin American Petrochemical and Chemical Association (APLA).

Pressed on potential petrochemicals projects, which could make Argentina a net exporter of polymers just like the US has become after its own shale gas boom, Andreucci was more cautious, preferring to focus on the upstream side of the business.

He said, however, that there is a “latent” potential for petrochemicals business in Argentina.

“Monetisation is always done at scale. First, you find the resources and make them available for export. At YPF, we also have some added problems to get credit for projects [given Argentina’s financial woes], so we must use our own cashflow to finance new projects,” said Andreucci.

“We must be careful at this stage, capturing opportunities at hand, and this could be the springboard to think about petrochemical projects. We have the resources, and we must know how to take advantage of them: we have a window of opportunity now [exporting crude oil and natural gas] and we have to take advantage of that first.”

The APLA Logistics event runs in Buenos Aires on 6-7 June.