MercoPress. South Atlantic News Agency
YPF unveils plan to invest 35bn dollars in five years with he help from partners
Argentina's state-controlled energy company YPF will need to invest 35 billion dollars to boost falling natural gas and oil output by more than a quarter by 2017, the new chief executive said on Tuesday in Buenos Aires. Read full article
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Disclaimer & comment rulesIs anyone else wondering where in hell they are going to get financing 7 Billion USD a year for 5 years? [The Chinese?]
Jun 06th, 2012 - 06:03 am - Link - Report abuse 0I think we should be told.
“Galuccio said 1,000 wells would be drilled next year”... it's not about how many holes you drill, sherlock, it's about the likelihood of each well going into a place where the likelihood of finding oil is high.
I'm going to drill 1000 wells in my back yard next year, let's see what happens with that strategy.
That is very aggressive number of wells to complete in 12 months. It takes longer to drill and “frac” wells in the unconventional formations (dead cow). Not to mention the special equipment needed. Possibly they pan to drill most of 1000 new wells in conventional formations I saw figures of less 100 rigs operating in the whole country right now
Jun 06th, 2012 - 06:32 am - Link - Report abuse 0Then it's ~10 holes a rig, based upon previous geological data. I doubt they've suddenly summoned new data out of the ether, given the turmoil going on in the company.
Jun 06th, 2012 - 06:41 am - Link - Report abuse 0Anyone can do a PESTLE Analysis of YPF's operating environment: Political Risk - High, Economic Risk - High, Social Risk - Medium, Technological Risk - High (No access to foreign tech, no tech to get oil out of shale), Legal Risk - High, Environmental Risk - Medium. From an investment standpoint, no one would touch it with a very very very long, very very sh!tty stick.
So this still doesn't answer where the 7 Billion USD a year is going to come from.
@3 I thought China was looking to invest in Argentina. I maybe wrong. Anyway GreekYogurt, where have you been? I have not seen one of your threads for a while.
Jun 06th, 2012 - 07:41 am - Link - Report abuse 0As alwaysm you have to ask exactly where this money is going to come from. Conservative estimates put the money of money needed to invest in Vaca Muerta as being bewteen 15-25bn (unless the 7bn mentioned here is going to be invested each year by the government and the rest made up externally).
Jun 06th, 2012 - 10:51 am - Link - Report abuse 0It will be interesting to see who comes along to the road show and then decieds to invest especially as you'd have to gte into bed with Axel who has stated on record that all oil and mining projects should be 100% owned by the government.
@4 - Bombadier Spoon.
Jun 06th, 2012 - 11:12 am - Link - Report abuse 0The Chinese were at one point looking to invest in Argentina. But then the Argentine government stole YPF, and the Chinese, known for their wisdom, decided against investing in such an unstable area, especially with the whole 'cap' on oil prices the RGs were demanding.
It comes to something when China believes that West African nations have more stable and honest governments than Argentina!
All those malvinistas and 'Argtards' were one minute telling everyone how China was going to save Argentina by investing in the country, the next they all went very quiet.
Hey China, why don't you approach the Falkland Islands Government, they've got lots of oil and gas waiting to be exploited, and they won't put stupid restrictions upon you.
I'd love to CFK threaten to 'sue' her 'good' friends the Chinese.
However, Argentina is never going to get anyone stupid enough to invest monies up to the US$35 billion that they require. Not when profits would be tiny at best or rather none existent. The Argentine government fails to understand that when people or companies invest money into something, they want decent profits in return.
However, I would pay good money to see the RG government on Dragons Den trying to get our resident Dragons to invest their money in this venture. Talk about funny, the Dragons would tear the RG government apart and leave them feeling humiliated. LOL
There you go, argies, that's where the next US$35 billion of your taxes is going. Isn't that something like 175 billion pesos? Still, what's that to a cuntry of 41 million? How many of those are employable? How many are unemployed? Let's say you've got 50% employable. That's 20.5 million. Then 8% are unemployed. That's 18,860,000 employed. That's only 1900 pesos each! Remember. Forget dollars, think pesos!
Jun 06th, 2012 - 01:01 pm - Link - Report abuse 0I am pretty sure it is physically impossible to drill 1ooo wells with the amount of drills they have, plus they have to import a lot of new equipment from the USA to do the fracking. They just don't have the U$.
Jun 06th, 2012 - 01:21 pm - Link - Report abuse 0These are pipe dreams, RGs are very good at lying about future projects, bullet train to Rosario, train to Chile, (good gracious they can't even keep their passenger trains from killing people!) anther Bridge to Uruguay, 100+ story bldg in reclaimed land in Puerto Madero...the list goes on and on.
It's mighty cold I wonder when they'll start sending employees home because they're out of nat gas...
Anyone know if the nat gas is back on in the West? They've had a lot of asphyxiation already..
Pretty soon I bet
@6 LEPRecon, Thank you for that. I was not aware that the YPF exporartiion would of be the main factor for China to look else where. I would have thought it would of been due to Argentina being a high risk country in regards to investment. Mainly I was thinking about Argentina not declaring the true figures on inflation and the trouble with EU, USA and Japan and the WTO. But I do see your point about the YPF part though.
Jun 06th, 2012 - 02:15 pm - Link - Report abuse 0Thank you for updating me.
Basically Galuccio is refloating the ideas of Pepe Estenssoro, who was a brilliant oil man. I think that he might get his 1000 wells, or fairly near to it. As I understand it these wells will be drilled in conventional areas. The big investment in the shale areas will have to come from outside investors, which is where Galuccio's plans will probably run into a brick wall.
Jun 06th, 2012 - 03:06 pm - Link - Report abuse 0The first thing that will have to happen if this plan is to work: raise the value of the product at the well head, US$42 is a no-no - they might be able to do it on something like US$60/65.
I think this guy has chosen his words very carefully. He obviously knows the hysteria and 'great expectations' that are anticipated of him, hence his
Jun 06th, 2012 - 04:00 pm - Link - Report abuse 0”We need to be realistic. Although I'd like to be able to double the production of (natural) gas and fuel overnight, I'm not a magician. In this industry, every extra barrel requires investment, technology and above all, hard work,“ he said, - has set the tone.
Not too sure if they have the kit needed to drill 1000 wells in 12 months or even if they have the skilled manpower necessary, we shall soon see. In any event, I cannot see 26% by 2017 being half-way enough to satisfy the demand given the probable dearth of imports by then.
I have been in the oil industry: rather him than me.
11 ChrisR (#)
Jun 06th, 2012 - 04:18 pm - Link - Report abuse 0Jun 06th, 2012 - 04:00 pm
Hear hear, I've not worked in the o/g industry, but I've lived near it most of my life. I honestly hope he makes a go of it, he's got the know-how and is obviously very sensible as his cautious words show. His big problem is going to be Axel Kicilloff as the Government rep on the board of directors of YPF. This bloke is sudden death for any industry, especially a complex one like o/g.
a) Set unrealistic expectations, relying on un-achievable things like argentinians doing hard work, getting foreign investment when their economy is furked.
Jun 06th, 2012 - 04:19 pm - Link - Report abuse 0b) Cry when you see a set of directors that includes one that knows nothing useful about economics and is drenched in failure at trying to revive the flagging airline that lost 2.3 Billion USD and another that oversaw the decline in Argentinian oil production and did nothing.
c) Fail to meet said expectation.
d) Blame foreigners for not investing; do not blame your unrealistic expectations or the laziness of the Argentinians.
e) Return to old job at Schlumberger in London.
That should pretty much describe this story going forwards.
13- Looks like you have their ticket!
Jun 06th, 2012 - 05:20 pm - Link - Report abuse 0CEO Galuccio seems to have a realistic view of the problems and needs - let's hope he can deliver.
Jun 06th, 2012 - 05:37 pm - Link - Report abuse 013 GreekYoghurt
Jun 06th, 2012 - 06:46 pm - Link - Report abuse 0I will stick with my post @11, however I disagree with e).
If he does fail I very much doubt he would be able to go back to Schlumberger - he would be a failure. The yanks don't care much for failure at this level.
That is reason enough for him NOT to fail.
16 ChrisR (#) and Greek,
Jun 06th, 2012 - 11:05 pm - Link - Report abuse 0I don't think he will fail, he has been just cautious enough to keep within possibilities while being hopeful enough to fool Kretina et al.
I give him 100% for cleverness I really do hope he manages to find the funding, he deserves to.
If he doesn't make it with YPF I think Schlumberger would be glad to have him back going by his past record.
@17 I personally think he's not got a hope. The technology he needs to turn shale into salable oil is beyond the Argentinians alone to develop in these timescales. Partners would run a mile because of the risks on their investments, and how do they expect to be paid? Dollars? Pesos? Investment is highly highly unlikely.
Jun 07th, 2012 - 11:57 am - Link - Report abuse 0Just drilling wells in any formation takes time and one well placed well is better than 1000 wells just blunderbussed around the countryside. He's just stalling for time while they get a real strategy.
So how's he going to find this £35 Billion? I think he probably needs considerably more money and a lot more time.
They don't deserve funding. Their Director presided over your national airline losing billions of dollars and failed in everything he touches. On top of that this company was stolen from investors, many of the pensioners. They deserve failure and mocking.
17 Simon68
Jun 07th, 2012 - 12:19 pm - Link - Report abuse 0In the oil business, at that level, your reputation is your last job.
Kicilloff is a major problem. He THINKS he knows what he is doing but he is wrong, spectacularly so, at everything he does.
I think he must be FatBoys fall back when the girlfriend has a headache because there is seemingly no other reason to go anywhere near him.
I think it may all depend on what power Galuccio REALLY has, and if he can slap Kicilloff down and make it stick.
If I were to put odds on a success (26% by 2017 being the marker) I would put it at 45% at best. Very difficult to make this company work in the political climate of Argentina.
19 the two hardest things to do will be:
Jun 07th, 2012 - 01:11 pm - Link - Report abuse 01 To convince outside investors to invest in YPF
2 To convince Kicilloff that YPF needs outside investors.
He is already on record saying that all oil companies and mining companies should be 100% state owned and generally spurns the idea of public/private partnership as I would spurn a rabid dog...
Nobody trusts their money with Argentina,serial defaulter and international pariah of the worlds financial markets.$35billion dollars? No way Josie.
Jun 07th, 2012 - 10:27 pm - Link - Report abuse 0Good news. Capitalists not investing? Thats ok, the state will, after nationalisation =) Btw Gallucio is indeed being commendably realistic, but who appointed him? Maybe the government are realistic too =)
Jun 13th, 2012 - 11:53 am - Link - Report abuse 0Commenting for this story is now closed.
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