06 March 2012 18:54 [Source: ICIS news]
HOUSTON (ICIS)--Argentina’s YPF will need a substantial injection of foreign capital to develop its unconventional hydrocarbon resources, but the recent threat of the country’s government nationalising the company will not impact the progress, YPF’s head of upstream activities said on Tuesday.
YPF has been in the midst of a spat with the national government, which has brought innuendo that the administration of President Cristina Kirchner would take control of the company, in which Spain’s Repsol holds a majority stake.
Repsol has a 58.23% stake in the company while Argentine conglomerate Grupo Petersen has 25.46%.
The federal government has pushed YPF to ramp up output of oil and gas as the nation’s subsidy bill grows for increased oil product and natural gas imports in the form of LNG.
But an executive from YPF said the disagreements between the Kirchner government and the country’s largest company are part of a relationship with a long history that will not reach the point of nationlisation.
“That is not the philosophy of Argentina,” Tomas Garcia Blanco, director of exploration and production for YPF, told ICIS on the sidelines of the IHS CERAWeek conference in Houston.
Blanco Garcia said the current tension with the government ebbs and flows.
“But [that] doesn’t mean we are going to have a divorce,” Blanco Garcia said.
YPF is courting investment to Argentina to accelerate the output of hydrocarbons in its unconventional resources, which are primarily in the Neuquen Basin.
Argentina has an estimated 774,000bn cubic feet (bcf) of technically recoverable reserves of natural gas, the third-largest behind China and the US, according to a global shale gas study by the US Energy Information Administration (EIA).
Blanco Garcia said “a lot of companies are interested in joining the Vaca Muerta team”, referring to the region in the heart of the country’s unconventional reserves that is still being drilled in a testing phase. Currently, 81 rigs are in operation in Argentina, Blanco Garcia said.
YPF would not sell direct equity in any of its resources in Argentina but is rather looking to secure financing to push its development, he said.
But Blanco Garcia said energy companies typically take a long-term view of an asset while the country’s government is being pressured to have results in the short-term.
“Sometimes you have to solve the short-term,” Blanco Garcia said. “We are talking to them and demonstrating that we have a beautiful asset that could change the oil and gas industry in Argentina.”
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