LOOKING AHEAD
| DOI | http://doi.org/10.1111/oet.12432 |
| Published date | 01 October 2016 |
| Date | 01 October 2016 |
LOOKING AHEAD
Argentina looks for ways to boost output
Faced with rising oil consumption, falling production,
and the consequent rise in imports, Argentina is looking
for ways to increase or at least stabilize its production.
Low crude prices and high levels of debt, however, are
making it increasingly dicult to nance the develop-
ment of new reserves and production. e government
has nevertheless decided to proceed with the develop-
ment of Argentina’s expensive shale reserves and is hop-
ing to persuade outsiders to invest.
Argentina’s conventional reserves of oil are modest,
and sucient for only 10.3 years at present rates of pro-
duction. Output meanwhile is falling. Net imports are
running at 42,000 bpd and are set to rise as consumption
increases (see Tab l e D) .
Argentina’s oil production peaked in 1998, since
which time it has fallen by about a third. Over the same
period, oil demand has steadily increased and in 2013
Argentina became a net importer (see Figure A) and
looks set to remain so unless it is able to reverse the
decline in its oil production.
Actual imports are greater than the gure shown in
TableDsinceArgentinamustimportadditionalquan-
tities of light crude to blend with its domestically pro-
duced heavy crude in order to allow those of the coun-
try’s reneries that do not have extensive upgrading
capacity to run the heavy material. ese imports allow
the export of about 50,000 bpd of Argentina’s domestic
crude,whichgomainlytotheUSandChina.
Raising production
e company primarily resp onsible for oil production
in Argentina is the national oil company, Yacimientos
Petroliferos Fiscales (YPF). e companyis short of cash
as a result of the present lowoil price and has be en forced
to scale back its capital expenditure. e government
hastriedtoremedythesituationbyraisingtheprice
Argentina’s reners payfor domestic crude. Heavy, sweet
Escalante crude priced at $54.90/bbl, while the lighter
Medanito is sold for $67.50. e average price of the
two crudes has been close to $40/bbl for much of 2016.
Reners have been trying to reduce their crude costs by
running cheaper imported grades.
High domestic prices alone are insucient to allow
YPF to nance its capital expenditures. It also needs to
renance up to $2 bn of debt owed mainly to domes-
tic creditors this year [1]. More debt will need to
be taken-on if YPF is to nance further upstream
development.
e prospects for stabilizing or increasing oil produc-
tion hang largely on the estimated 16bn bbl of shale oil
reserves that lie in Neuquen province in the south west
Table D
Argentina: Oil Prole, 2015
Proven Reserves 2.4 bn bbl∗
Reserves Remaining 10.3years†
(bpd)‡
Production 637,000
Consumption 679,000
Net Imports 42,000
∗As of January 1, 2016
†Based on 2015 production
‡Including NGL
Totals rounded
Source: (Reserves) Oil & Gas Journal;
(Other) BP Statistical Review of World Energy,2016
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011 2012 20132014 2015
Consumption
Production
Net Imports
(th bpd)
Figure A:Argentina: Oil Balance, 2005-2015
Totals rounded
Source: BP Statistical Review of World Energy,2016
of the country, in a prospect known as “Vaca Muerte,”
which means dead cow. Production has already begun
and YPF plans to produce about 50,000boe/d this year.
e intention is to increase this by 2017 but this depends
on the completion of infrastructure projects connecte d
with the production and continuing improvements in
the cost and eciency of well drilling.
Outside help
Itishopedthatprivatecapitalwillsupplementwhat
YPF can raise internationally. is should be easier
toattractthaninrecentyearsfollowingtheelection
late last year of President Mauricio Macri, who has
begun to liberalize investment by removing many
controls on capital and currency transfers [2]. Among
the companies considering their involvement in Vaca
Muerte are ExxonMobil, Total, Shell, and BP.
© 2016 John Wiley& Sons Ltd
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