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Dallas, TX (PRWEB) December 28, 2012
The renationalisation of YPF and subsequent aggressive but realistic strategic investment plan set out by the company is the new driving force behind Argentinas energy sector. While foreign interest in the countrys shale potential exists, as evidenced by Chevrons recent entrance, we remain bearish on the sector and its prospects for receiving much-needed foreign investment. We expect production at existing fields to remain high into 2013, primarily on the back of continued pressure on YPF to produce since its nationalisation. Further changes to our forecasts, including reserves and refining capacity, will come when the implementation of the five-year plan begins in earnest.
The main trends and developments we highlight in the Argentine oil and gas sector are:
- The fiscal regime needs work if Argentina is to secure adequate long-term investment and harness the countrys apparent potential. Indeed, YPF is looking to raise US$1bn in debt to fund its planned 2013 capital expenditures. In addition to the risks associated with investing in the recently nationalised company, BMI believes that sizeable currency devaluation is in store for Argentina amid a broader weakening of the economy.
- An audit carried out by US consultant Ryder Scott to assessed the potential of the Vaca Muerta formation in Argentinas Neuquén Province to hold estimated prospective resources of 21.2bn barrels of oil equivalent (boe), contingent resources of 1.5bn boe and booked proven, probable and possible (3P) reserves of 116mn boe net to YPF. This is a considerable increase on a November 2011 contingent resources estimate of 927mn boe. In one of Repsols last investor presentations as the parent of YPF it noted that Argentina has the potential to replicate the shale revolution witnessed in the US, while the CEO of US independent EOG Resources said that the Vaca Muerta play could be bigger than the 5.7bn bbl Eagle Ford, a formation located in south Texas, US.