Argentina's Yacimientos Petroliferos Fiscales SA (YPF) has disclosed more details of its upstream and downstream plans as a restructured, privately owned company.
Since the Argentine Congress in September 1992 approved YPF's privatization plan, the former state owned oil company has received more than $2.1 billion from sales of nonessential assets.
YPF began the last phase of transition to a public company in July 1993 with an initial offering of capital stock on the New York Stock Exchange. Argentine law requires the government to retain 20% of YPF's stock.
Speaking at a joint meeting in Houston of the American Petroleum Institute and International Association of Drilling Contractors, YPF Pres. and Chief Operating Officer Jose A. Estenssoro revealed plans for 1994 and beyond, including:
- Exploration and development spending of more than $1 billion/year during 1995 2003, up from $974 million this year. YPF's E&D spending in 1993 totaled $599 million.
- Increasing oil production in 1994 to 379,000 b/d and in 1995 to 423,000 b/d, including 318,000 b/d and 358,000 b/d, respectively, on YPF operated tracts.
- Restoring gas production in 1995 by more than 100 MMcfd to about 1.72 bcfd.
- Refining and marketing capital spending of $249 million in 1994, more than twice comparable outlays in 1992 of $114 million.
YPF INTERNATIONALLY
In addition, Estenssoro said YPF by third quarter 1994 expects to ramp up the flow of oil through the recently completed 270 mile, 16 in. Argentina-Chile pipeline. Throughput by July is expected to climb to 106,000 b/d from 40,000 at present, with an the new volume coming from wells in Argentina's Neuquen basin.
YPF expects to produce about 60,000 b/d of the higher flow. Estenssoro said Petrolera San Jorge by yearend could be delivering as much as 30,000 b/d of oil into the international oil supply link. Mexpetrol and Perez Companc also are to produce oil into the line.
YPF wants to expand its activity into other South American nations. The company is forming a comprehensive plan to invest in upstream oil and gas projects in other countries involving geology similar to Argentina's. Downstream projects also are being considered.
"We're also looking at Chile with the idea of finding out whether the mirror image of what happens in the Neuquen basin occurs on the Chilean side," Estenssoro said.
Contract talks are under way between YPF and Bolivia about joint projects on South Andean acreage formerly held by Gulf Corp. and on a frontier area near Santa Cruz. YPF also is interested in joint upstream projects in Uruguay and Peru.
Estenssoro said YPF hopes to develop service station networks in Chile, Bolivia, Paraguay, Uruguay, and eventually Brazil.
UPSTREAM
With recoverable reserves estimated at more than 2.8 billion bbl of od equivalent (BOE), YPF ranks 11th in size among the world's publicly traded oil companies.
Estenssoro said YPF will focus exploration spending in the Neuquen and Golfo San Jorge basins, which hold almost 90% of its reserves. The company in 1993 replaced 110% of its oil production, a rate expected to surpass 120% this year.
YPF in 1993 produced an average 314,663 b/d of oil, about 52% of Argentina's oil production, including 140,990 b/d of 210,429 b/d produced in Neuquen province, 56,606 b/d of 117,102 b/d in Santa Cruz province, and 38,105 b/d of 79,507 b/d in Mendoza province. Argentina's total 1993 oil production averaged 596,263 b/d.
YPF's oil and gas finding costs in 1994 are expected to range from $1.40 to $2/BOE, up from 97cts/BOE in 1993 and a recent low of 57cts/BOE in 1992. Even at that rate, YPF finding costs compare favorably with those of other companies operating in Argentina, Estenssoro said.
Both YPF's development and lifting costs in 1994 are expected to decline to $3.30/BOE, down $1/BOE and 38cts/BOE, respectively, from 1993. The company's 1991 development costs averaged $6.60/BOE and 1990 lifting costs $6.78/BOE.
Much of YPF's improved operating results is the result of streamlined procedures and reorganization. For example, YPF in 1994 intends to trim another 1,000 employees from a payroll roster that in 1993 included 7,500 workers. At the peak in 1989, YPF employed more than 37,000 fulltime and 15,000 temporary workers.
AVAILABLE ACREAGE
Estenssoro said YPF is offering prime Argentine exploration acreage to private companies.
As a private company, YPF on its own and in association with other companies retains only about 4.2% of Argentina's 533.8 million acres of productive and prospective oil and gas acreage, including:
- 2.8 million acres of the country's 18.8 million onshore exploratory acres.
- 4 million acres of 71.8 million offshore exploratory acres.
- 27.4 million acres on productive onshore properties covering 333.6 million acres.
- 4.1 million acres on productive offshore tracts covering 109.6 million acres.
By comparison, other privately owned companies hold 26.2% of Argentina's productive and prospective oil and gas acreage, including 91.8 million acres onshore and 32.3 million acres offshore. YPF is offering for exploration and development 230.4 million acres onshore and 371.4 million acres offshore, or nearly 70% of Argentina's productive and prospective oil and gas acreage.
Argentine law allows private oil and gas companies to sign four types of hydrocarbon agreements:
- 1 year, renewable permits to conduct surface geological and geophysical exploration.
- 9 year exploration permits with optional 5 year extensions to explore for hydrocarbons within assigned areas.
- 25 year exploitation concessions with optional 10 year extensions to develop and produce oil and gas on assigned tracts.
- 35 year concessions with optional 10 year extensions to transport oil, gas, and refined petroleum products.
DOWNSTREAM
YPF has retained 52.6% of Argentina's 655,000 b/d of refining capacity and about a 53% share of domestic markets for primary hydrocarbon products.
YPF's La Plata refinery processes about 140,000 b/d of oil from the Golfo San Jorge basin and 60,000 b/d from the Neuquen basin. YPF's Lujan de Cuyo refinery processes about 60,000 b/d of oil from Mendoza Norte and a combined 60,000 b/d from Neuquen and Mendoza Sur. The Plaza Huincul refinery processes about 25,000 b/d of oil from Neuquen.
Esso controls 17% of the country's refining capacity, Shell 15.6%, and other companies a combined 14.8%. Shell with 19% of domestic retail service station outlets and Esso with 18% are YPF's main marketing competitors in Argentina.
YPF in 1994 expects to spend $97.4 million to continue upgrading its network of 2,800 Argentine retail outlets, up from $42.5 million in 1993.
Other 1994 spending by YPF includes $54.8 million to improve downstream operating efficiency and $64 million on unspecified environmental activity, up from $18.3 million and $3.7 million, respectively, in 1993.
