YPF is preparing to deepen its most ambitious projects next year with its president and CEO Horacio Marín confirming that in the next few days the company will be closing the deal on the entry of international partners for its liquefied natural gas (LNG) project, actively seeking funds on Wall Street immediately afterwards.
The CEO anticipated that the process to structure the financing of the works which will change Argentina’s export matrix is to begin with JP Morgan next week.
Staring next week, the United States bank will begin a round of consultations with over 200 banks to start the project financing of 12 million tons. Sources linked to the operation have confirmed that the aim is to raise US$12.5 billion, a sum corresponding to the first phase of the project (two liquefaction vessels), which requires 70 percent of the total investment to be covered by debt while the rest is to be supplied from the capital of the partners.
According to the road map, the first to sign entry will be Adnoc, Abu Dabi’s state oil company, while awaiting the entry of a replacement for Shell, who formed part of the initiative’s original scheme but decided to put its participation on hold. In YPF’s Puerto Madero tower offices they assure that they are already negotiating with a "super major" to occupy that place and escalate the project from 12 to 18 million tons annually.
YPF is discussing entry into the project with an overseas company. The aim is to see Argentina exporting US$40 billion to US$50 billion as from 2030. For that, if expansion to 18 million tons annually materialises, the total financing requiring structuring from the banking consortium headed by JP Morgan would climb to some US$17 billion.
With the price of a barrel of crude dipping below US$59, alarm-bells have been ringing in the sector with instability projected next year for a commodity whose price is crucial for Vaca Muerta shale. YPF has therefore designed a strategy of "armour-plating" for its portfolio management. Marín has assured that with the “unexpected” sale of Profertil fertilisers, the company with a majority state shareholding has generated reserves with enough liquidity to cover the price volatility.
Despite the scenario of depressed prices, YPF projects an expansionist 2026. The company will invest US$6 billion, 20 percent more than this year, with the focus almost exclusively on shale oil. Consulted Perfil, Marín described the financing for this investment plan as "assured," dispelling doubts about its capacity of implementation.
Productivity in Vaca Muerta has substantially improved.
"Over 31 percent improvement in fracking and over 25 percent in drilling," detailed the CEO. This will permit the objectives of production to be attained with less plant. As for transfer, the oil pipeline Vaca Muerta Oil Sur is advancing at a good pace.
"It’s over 45 percent complete, advancing on time and in shape," affirmed Marín. The projection is that by the start of 2027, Argentina will be exporting by that route "over 180,000 barrels," doubling to 360,000 within six months and reaching 550,000 barrels by 2028.
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