As Lew said during a presentation to company investors, during the first quarter of 2023 “We continue with our strategy of adjusting the prices of local fuels in order to mitigate, to the greatest extent possible, the effect of the depreciation of the currency, while reducing or avoiding widening the gap between the price of local fuels against at international parities.
However, from YPF they revealed that the average prices of fuels measured in dollars decreased by 3% year-on-year, while the gap between local prices versus import parity fell by an average percentage of 20% in the first quarter, 15% in April and, more recently, 10% in the first days of May, within the framework of a permanent drop in international prices.
Within this framework, Lew was consulted about the price outlook for the next six months and the continuity of fuels at Fair Prices. “We were able to increase fuel prices at least once a month. We are trying, at a minimum, to follow the evolution of the currency devaluation and try to keep our prices in dollars as stable as possible. We have managed to achieve that goal during the first quarter of this year, the average of our average prices in dollars was only 3% down,” he claimed.
The executive estimated that for the coming months it is expected “to be able to continue with this strategy, adjusting prices in such a way as to compensate the evolution of the currency as much as possible”. Last month the government agreed with the oil companies that the price of fuels will rise 4% per month in the case of gasoline and diesel, from Saturday April 15 to next August 15.
“We are aware -said Lew- of the local context in macroeconomic terms, we are going to take this situation into account, but we will seek to continue adjusting prices in relation to the value of the currency and to maintain a healthy relationship with international parity”, he remarked.
The impact of a mega devaluation on YPF
In another section of the round of consultations, Lew referred to the possibility of a change of government and a sudden devaluation of the currency. “It’s hard to know how and when that could happen, but of course we have a strategy to handle that scenario.”answered.
In this context, he stressed that “although a deep devaluation of the currency will definitely erode our income, taking into account that a large part of our income is related to the price at the pump, from 55% to 60% of the total our income comes from the sale of fuels in the local market, it is also fair to say that a large portion of our costs are in pesos and in that case they could benefit from a potential devaluation. In summary, we could say that the devaluation would have a neutral effect as a consequence of the difference between income and costs.“.
“Also, it’s going to depend on our ability to pass that potential devaluation into prices quickly. What we hope is that we have the ability to do that efficiently and quickly, but clearly it’s going to depend on the general context that prevails in that moment,” he concluded.
First quarter results
last week the majority state oil company reported an increase in its net profit compared to the first quarter of 2022 by reporting a profit of $58,600 million, more than double that of the same period last year, when the figure closed at $26,417 million. In addition, adjusted EBITDA reached US$1,044 million, 12% higher than the previous quarter.
The analyzed period recorded a production of hydrocarbons of 511,000 equivalent barrels per day, which represents a growth in oil production of 7% compared to the first quarter of 2022 and 3% compared to the previous quarter. In addition, it reported a 2% increase in gas production compared to the fourth quarter of last year.
Source: Ambito
