Saturday, December 29th 2012 - 06:30 UTC

YPF signs shale gas exploration deals with Pan American Energy and Bridas

Argentina’s nationalized oil and gas company YPF announced on Friday that Pan American Energy, PAE, would be investing 3.4bn dollars in gas production in the next five years while Bridas, belonging to the Bulgheroni brothers said it plans to invest 1.5bn dollars in the development of the non conventional shale deposits in Vaca Muerta.

CEO Galuccio ends the year with several significant oil and gas development agreements

The deal with PAE, which is partly owned by BP and Bridas, should provide a 4.3% increase in annual gas production from 2013 to 2017 said the Argentine government.

“The agreement with PAE means a fiscal savings of 4.3bn dollars and will help avoid having to invest 6.8bn dollars in gas and liquid fuel imports”, said Federal Planning minister Julio De Vido.

He added that under the terms of the deal in four to five years Argentina will have recovered 20 million cubic metres of gas, which must be added to the 40 million already recovered by YPF.

Under the terms of the agreement with the Bulgheroni brothers, Bridas will drill 130 wells in 2013 and 2014 under a pilot program in the Vaca Muerta formation in Neuquen, followed by as many as 1000 additional wells, YPF Chief Executive Miguel Galuccio said at a press conference.

The agreement would see YPF eventually transfer a 50% interest in two areas that together comprise 663 square kilometres in Vaca Muerta, which is home to most of Argentina's shale oil and gas deposits.

As part of Friday's agreement, the Bulgheroni companies will also obtain 500 million dollars in financing for YPF to fund further investment in the areas the two companies will develop together. In a stock market filing, YPF said it signed the agreement with Bridas International SA, which has links to the rest of the Bulgheroni empire and China's Cnooc Ltd.

The Bulgheroni family controls Bridas Energy Holdings, BEH, and has a stake in Bridas Corp--a joint venture between BEH and Cnooc. YPF partnership with the Bulgheroni family comes less than two weeks after it announced a similar arrangement with US Chevron Corp.

That agreement would see Chevron and YPF spend about 1 billion dollars to drill 100 wells in a 290-square-kilometer area in Vaca Muerta. The results of that pilot program will help the companies finalize plans to drill an estimated 2,000 wells for about 15 billion.

In recent months the former Schlumberger Ltd. executive has met with Statoil, CNOOC Ltd. and other foreign oil companies to test the waters for potential investment or partnerships.

President Cristina Fernandez is seeking outside investment and technical expertise to make Argentina energy self-sufficient once again after years of declining production and reserves turned the country into a net energy importer.

In May Cristina Fernandez formally seized a 51% stake in YPF from Spain's Repsol SA in a dispute over investment. The Argentine president accused the Spanish company of siphoning capital out of YPF and failing to invest enough in its operations. Repsol has denied those accusations and is seeking about 10 billion dollars in compensation for its YPF shares.

Earlier this year, CEO Galuccio said YPF has the means to invest 24.7 billion from its own pocket through 2017, with that figure rising to 40.4 billion, if it can sign joint ventures and get outside financing.

CEO Galuccio also defended the 6% average increase in fuel prices arguing they will continue along the year since they are the main source of financing for the investments YPF needs to make.

“If we want to continue investing, we have to continue increasing prices but in a logic and reasonable way” said CEO Galuccio.

Since June YPF has increased fuel prices at the pump three times accumulating 40% in the twelve months of 2012. Premium gasoline is selling at over a US dollar per litre.

18 comments Feed

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1 toxictaxitrader2 (#) Dec 29th, 2012 - 11:00 am Report abuse
Not a reward/risk calculation I would make,unless it is a holding position awaiting a change of government.
2 ChrisR (#) Dec 29th, 2012 - 12:26 pm Report abuse
I would not touch anything in Argentina, especially to do with YPF.

They are not to be trusted.
3 yankeeboy (#) Dec 29th, 2012 - 12:34 pm Report abuse
I imagine anyone with any current o/g investments in Argentina is being threatened and intimidated into ponying up so cash for development.
It is less risky to throw in rather than having you or your family be killed, kidnapped, bankrupted or your company nationalized.

Rg ministers are known to negotiate with a gun on their desk.

4 Conqueror (#) Dec 29th, 2012 - 01:28 pm Report abuse
Wow. A 40% increase in road fuel prices in a year! Still, plenty of scope for more increases. Road fuel should be at least US$2.00 per litre. In a failing economy, people shouldn't own cars. And even if they do, they shouldn't be able to afford to go anywhere. They should be working. Sixteen hours a day. Keep them off the streets. On their knees in the fields. Cutting furrows with a small trowel. Then walking back to their hovels. Evenings can be spent making their clothes.
5 GeoffWard2 (#) Dec 29th, 2012 - 02:29 pm Report abuse
Pan American Energy is owned 60% by BP: 40% by Bridas.
Bridas Corporation is an 'independent' oil and gas holding company based in Argentina, 50% owned by China National Offshore Oil Corporation (Cnooc).
So to say “Bridas, belonging to the Bulgheroni brothers of Argentina” and “The Bulgheroni family controls Bridas Energy Holdings, BEH, and has a stake in Bridas Corp--a joint venture between BEH and Cnooc.” is stretching the truth.
The deal with Chevron seems somewhat similar.
But the stakes, commitments, profits, etc seem somewhat opaque.

So -
once the Chevron's appropriation of its total assets in Argentina is sorted (the Ecuador civil court case),
and once Unasur unblocks the ban on dealing with Chevron (the Brasil deepwater case),
and once the Argentinian Government pay the Spanish (the Repsol appropriation case),
YPE (the Argentinian state oil/gas comapany) are free to deal with
BP (the ongoing Bay of Mexico USA case)
and Cnooc (the Chinese 'private'/state oil/gas company).
By the way, what happened to Sinocorp?

I think all parties are sufficiently enmeshed by the Argentinian Government now that there will be no easy escape for any of them.
6 ChrisR (#) Dec 29th, 2012 - 03:00 pm Report abuse
5 GeoffWard2

And not ONE of them saw the sucker punch coming.

I bet they will see the next one, due anytime now.
7 Shed-time (#) Dec 29th, 2012 - 04:16 pm Report abuse
tree-bark soup anyone? it's nearly sunday when we get a few slices of shoe to go with it.
8 Nostrolldamus The 5th (#) Dec 29th, 2012 - 08:22 pm Report abuse

half of British have considered leaving that hapless island... harsh times, harsh times.
9 British_Kirchnerist (#) Dec 29th, 2012 - 11:21 pm Report abuse
Good news =)
10 Xect (#) Dec 29th, 2012 - 11:33 pm Report abuse
Ah if only it were true Tobias which quite clearly it is not.

Sure you can troll to a higher standard than this? This is at the level of Marcus, think or British_Kretin.....
11 British_Kirchnerist (#) Dec 30th, 2012 - 12:46 am Report abuse
#8I don't think so many will leave (nor do I think Scotland will leave). I hope we stay and fight for a better Britain, one without Cameron's austerity
12 toxictaxitrader2 (#) Dec 30th, 2012 - 03:52 am Report abuse
11 BK
and where will the money come from??Argentina gives a lesson in over borrowing! pariah for 25-30 years,talk sense
13 Shed-time (#) Dec 30th, 2012 - 11:46 am Report abuse
The good thing about austerity is it prevents something called 'bloated civil service', where you DON'T get someone called blair, trying to hide lazy people into civil service jobs rather than trying to get them employed in the private sector where they'll be producing value for the economy. Then the private sector have to import lots of not-lazy people from abroad to do the value-creation.

Then when we realise that Blair is actually stealing from the next-generation's pockets in order to balance his accounts and make it look like people have real jobs, we all find that the finances have gone to utter utter sh!t. Then utter utter lazy morons want to vote for the same people who cooked the books and engaged in intergenerational theft simply because they're lazy and want a not-job which doesn't actually deliver any value to the economy.

This is basically how Scotland works.
14 toxictaxitrader2 (#) Dec 31st, 2012 - 07:58 am Report abuse
Democracy always breaks down like this ,people voting for themselves rather than the common good.
15 Pete Bog (#) Dec 31st, 2012 - 01:13 pm Report abuse
Is this deal OK with Repsol?
16 British_Kirchnerist (#) Dec 31st, 2012 - 03:32 pm Report abuse
#14 So whats the solution? Dictatorship?!
17 GeoffWard2 (#) Dec 31st, 2012 - 06:43 pm Report abuse
Nostrolldamus The 5th (#8)
'half of British have considered leaving that hapless island... harsh times, harsh times.'

Yes, with a wet year like 2012, I can understand it!
Most chose Spain and the sun, but 'hapless' better describes their destination, not their origin. So I think that sun is the key to the 'problem'.
I chose Brasil some years before. I have loved the country and continue to work towards its betterment. Sun as well!
18 Pirat-Hunter (#) Dec 31st, 2012 - 07:49 pm Report abuse
I will like to remind everyone that money is a beast that adores money. So if Pan am or Chevron don't drill in Argentina, I am sure Venezuela, Brazil, Russia, Germany or China will be very much willing. Never underestimate the power of the beast. VIVA CRISTINA!

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