BUENOS AIRES - Argentina's top oil and gas producer, state-run YPF SA, plans to invest $3.1 billion in exploration and production in Santa Cruz Province over the next five years as part of a deal to extend concessions there.
The investment, which the company detailed in a statement late Thursday, is part of a broader plan by YPF Chief Executive Miguel Galuccio to spend at least $24.7 billion through 2017 to boost oil and gas output across the country.
Mr. Galuccio said this is what YPF can afford to invest on its own. He said that could rise to $40.4 billion if YPF is able to sign joint-venture deals and obtain outside financing.
YPF said the investment doubles its average annual investment in the province over the past five years.
"This decision drastically reverts the divestment planned in previous years for the province by the company's previous owner," the statement said, referring to YPF's previous majority shareholder, Spain's Repsol.
Argentina's government expropriated YPF from Repsol earlier this year, but it hasn't publicly offered to compensate the Spanish company for the loss of its unit. Repsol is seeking around $10.5 billion in compensation.
Mr. Galuccio has acknowledged that some investors won't be interested in partnering with the company because of the way YPF was expropriated from Repsol. He has also voiced confidence that investor interest will rise if YPF is able to show concrete results from its exploration and production program.
So far, however, YPF has been able to unveil any major new deals with outside investors.
YPF and Chevron Corp. recently signed a memorandum of understanding to explore for unconventional energy in the South American nation. However, analysts say a recent embargo on Chevron assets in Argentina could hinder or delay future deals.
Earlier this month, a judge here embargoed up to $19 billion of Chevron's assets and receivables in Argentina as part of a decades-old dispute involving environmental damage claims against Chevron in Ecuador. Argentina and Ecuador are signatories to a treaty that allows courts in other countries to enforce embargos ordered by courts in another.
Chevron doesn't have significant assets in Ecuador, so the plaintiffs have been trying to seize its assets in other countries to enforce settlement on the judgment.
Enrique Bruchou, lead attorney for the Ecuadoreans in Argentina, valued Chevron's assets in Argentina at $2 billion.
Chevron has repeatedly denied the claims and said the Ecuador judgement is the product of bribery and fraud.
Chevron says its operations in Argentina are conducted by subsidiaries and that the plaintiffs have no legal right to embargo its assets in Argentina.
Argentina ranks third in the world, behind China and the U.S., in potentially recoverable shale-gas reserves, with 774 trillion cubic feet, according to a study last year by the U.S. Energy Information Administration.
Copyright (c) 2012 Dow Jones & Company, Inc.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles