The head of Yacimientos Petroliferos Fiscales SA, Buenos Aires, has outlined an ambitious oil and gas development plan for Argentina into the next century.
Jose A. Estenssoro said capital spending of about $27 billion through 2004 should allow YPF to maintain the strong performance achieved since it concluded a 2 1/2 year privatization process in June 1993. YPF expects to contribute more than $15 billion of the projected spending.
The sums do not include a commitment of more than $1.7 billion to acquire Maxus Energy Corp. The breakout is $1 billion in Maxus debt assumption and $742 million to buy the Dallas company's common stock (OGJ, Mar. 13, p. 43).
If the long range spending program takes shape as planned, Argentina should be able to boost oil production to more than I million b/d by the end of the century from 710,000 b/d in December 1994. Gas production in 2004 from currently active basins would increase to 4.9 bcfd by 2004 from 2.7 bcfd in 1994.
Achieving the goal depends largely on whether the Argentine government can balance its budget, maintain macroeconomic stability, and assure full convertibility of foreign currencies and international financial instruments.
Meantime, Argentina's oil reserves likely would increase to 4.5 billion bbl and gas to 19.5 tcf. The country's estimated reserves at yearend 1994 were 2.2 billion bbl of oil and 18.2 tcf of gas. In Estenssoro's outlook, revenue
generated for government by oil and gas fuel tax, value added tax, royalties, corporate tax, and other levies in 2004 could amount to more than $7 billion.
Estenssoro detailed the outlook for a large crowd of international oil and gas executives at the opening plenary session of a 2 day Cambridge Energy Research Associates (CERA) energy strategies conference in Houston. CERA's program involved state owned company privatization, a key energy industry strategy.
UPSTREAM SPENDING
Most of Argentina's oil and gas related spending as projected by Estenssoro will go to upstream projects, including $6 billion for exploration and $14 billion for development and production. Country--wide, Estenssoro expects a reserve replacement ratio of at least 1:1 during the projected period.
Exploration is to focus on 20 onshore and offshore sedimentary basins in Argentina covering a combined 455 million acres. Most activity is expected in five basins covering about 141 million acres where the country currently has production.
Here are Estenssoro's expectations by region:
- In the Austral basin, four to six oil fields to be discovered with combined reserves of about 200 million bbl and three or four gas fields with combined reserves of 3.5 tcf.
- In the Golfo San Jorge basin, 30-35 oil fields with 1.1 billion bbl combined.
- In the Neuquen basin, 10-15 oil fields with 1.3 billion bbl and 4-6 gas fields with 4.5 tcf.
- In the Northwest basin, 8-10 oil fields with reserves of 500 million bbl and four to six gas fields with 10.5 tcf.
- In the Cuyana basin, three or four oil fields with 60 million bbl.
Estenssoro expects areas in unexplored basins to contribute 20-25 oil fields with combined reserves of 1.3 million bbl and two or three gas fields with I tcf combined.
DOWNSTREAM SPENDING
Oil and gas transportation outlays during 1995-2004 are to amount to $3.7 billion.
YPF in the next 3 years is to lay a crude oil pipeline from the Neuquen basin to the Atlantic coast. Working with Chile's ENAP, YPF in February 1994 completed a 270 mile, 16 in. oil pipeline from Puesto Hernandez, Argentina, to Concepcion, Chile. Throughput at yearend was averaging near the pipeline's 106,000 b/d design capacity.
Refining outlay are expected to reach $900 million by 2004.
Estenssoro also predicted about $900 million will be spent in Argentina through 2004 to improve marine and land transportation and storage facilities for refined petroleum products, $1 billion for gasoline service station modernization, and $500 million for environmental remediation and protection, mainly downstream.
Gas transportation needs are to be met with construction of three large transmission systems, one domestic and one each serving markets in Chile and Brazil. Peak shaving facilities and underground storage is to be developed to increase gas production efficiency and support periods of peak demand.
At present, two private Argentine gas transmission companies operate 6,200 miles of large diameter pipelines with capacity of 3.64 bcfd. Eight companies operate gas distribution systems with a combined 77,650 miles of line.
Estenssoro expects downstream spending by 2004 to boost Argentina's refining capacity by 300,000 b/d to more than 900,000 b/d.
Fleets of new trucks and automated facilities are the keys to storage and transportation sector improvement. Sea and river transportation vessels must be upgraded to meet new regulations requiring double hull construction, inert gas systems, and modern storage and buoy docking facilities.
YPF does not intend to increase the number of retail service stations it operates. Rather, a modernization program already under way is expected to provide Argentina in the next 3 years a retail network comparable to any in Europe or the U.S.
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