Argentina's YPF signs production deal with Gazprom
State-controlled oil company YPF sealed an agreement yesterday with Russia’s state-controlled energy giant Gazprom to develop tight and shale gas in Argentina in what marks the latest deal that the firm has signed with an international firm to boost local production in an effort to cut back on energy imports. The deal sets out the principles for cooperation for a final accord that would be signed before March 2016.
The agreement comes after President Cristina Fernández de Kirchner and her Russian counterpart Vladimir Putin took part in the signing ceremony of a memorandum of understanding (MOU) between the two companies in April to explore and produce hydrocarbons jointly. It also marks the latest example of Moscow’s involvement in Argentina’s energy sector.
“We clearly said in our business plan that we needed large partners to develop our resources as it wasn’t going to be possible to do it by ourselves,” YPF CEO Miguel Galuccio said after meeting with his Gazprom counterpart Alexey Miller in Vladivostok, Russia, yesterday. YPF was the only Latin American firm to seal a deal with the Russian energy giant, which also signed agreements with three additional foreign firms.
Argentina has 30 times more unconventional gas and nine times more unconventional oil than traditional reserves, according to YPF figures. The country has the world’s second largest shale gas reserves, after China, and the fourth largest shale oil reserves, after Russia, the United States and China, according to estimates. Since 2013, YPF has invested more than US$2 billion in Vaca Muerta, the country’s massive shale oil and gas formation that is mostly located in Neuquén province. But because of the magnitude of the resources and the country’s difficulties in obtaining financing from abroad YPF is looking for foreign partners — a task that has become even harder over the last year amid plunging oil prices. The block is already producing 43,000 barrels of oil daily (6% of the nation's total).
YPF managed to increase natural gas production by 14% and oil production by 6% during the first six months of the year, compared to the same period last year. Nationwide, gas production rose 3.5% and oil production 0.4% in the first half of the year.
The deal between YPF and Gazprom marks the latest example of how the CFK government has been trying to boost ties with Moscow over the past few years. Fernández de Kirchner travelled to Russia in April to meet with Putin and expand the economic ties between the two nations, signing a set of agreements that included the MOU with Gazprom, the construction of a sixth nuclear reactor in Argentina by Russian firm Rosatom and the supply of nuclear fuel for reactors currently producing energy in Argentina.
Gazprom has rights over the largest natural gas reserves in the world, 18% on a global scale and 70% only in Russia. It’s the only producer and exporter of natural gas in Russia and has the world largest network of natural gas transportation with more than 161,000 kilometres (100,000 miles) of pipelines.
At: http://buenosairesherald.com/article/198021/ypf-signs-production-deal-with-gazprom-
= new reply since forum marked as read
