In the market of oil & gas they consider that hydrocarbon production must be increasedfor three fundamental objectives: on the one hand, because Vaca Muerta has one of the largest reserves in the world and we must “take advantage of the window of opportunity” that gives the energy transition. On the other hand, because increasing exports implies the foreign exchange earnings, the reduction of subsidies and greater foreign direct investment. And, thirdly, because achieving that greater scale would help lower costswhich would enable us to achieve not only competitive domestic prices supplying the market, but also allocating a significant production margin to export at international prices or export parity.
When asked about the need to increase production, Juan José Carbajales, former Undersecretary of Hydrocarbons, said: “In oil production it is already happening. With YPF at the helm, plans are being carried out to increase production, but also to increase transportation capacity, which are no longer projects in the pipeline but are now being executed.” In fact, the sector, which estimated to reach million barrels per day by 2030, it expects that 1.4 million barrels per day will be reached by the same date.
It is important to mention that the September data speaks of a production of 645,000 barrels per day, which is the highest figure since 2008. However, despite the notable influence that YPF has in this matter, it has not yet been possible to achieve the historical record of 1998, when 800,000 barrels per day were produced.
As examples of progress in transportation issues, Carbajales mentioned the Trasandino Oil Pipeline (Otasa), Vaca Muerta Norte or Vaca Muerta Sur, for export through Río Negro.
However, he also indicated that A series of conditions must be met: “The industry is already thinking about turning Argentina into a net oil exporter, and is doing everything necessary. But some questions must be raised regulatory, access to the exchange market, not touching export rights and respecting legal certainty.”
Furthermore, the economist, owner of the Paspartú consulting firm, added a factor that he considers is never put on the table: “The increase in production will generate social, infrastructure, or environmental tensions. “The industry should move forward in providing a system for reducing or capturing emissions.”
Like Carbajales, sector analysts consider that contemporary experiences of expansion and growth must be taken into account, especially that applied in the 90s. This experience is divided into two stages: the first, which could last about three years, where a logic of internal supply and the export of primary production is achieved. A second, which would last from three years onwards, linked to the export of the derivatives. This would enable an alignment of production factors and a business collaboration policy, with the consequent industrial chain with multiplier effect in added value.
Increasing hydrocarbon production would not have the sole purpose of self-sufficiency, because Argentina currently exceeds the production consumed locally. “Scaling production does not have to be designed to solve the fuel problem, the refining capacity is about 500 thousand barrels per day, which is already produced today in Argentina, and the surplus has to be exportable,” he considered. Gerardo Rabinovichvice president of the Argentine Energy Institute «General Mosconi» (IAE).
Along these lines, Rabinovich added that, due to the Hydrocarbons Law, it is “correct” that the first thing companies should do is supply the domestic market, and then export the surpluses.
For this reason, Carbajales suggests that they should begin to consider relaxations to export regulations. “The export authorization mechanism must be made more flexible. The law establishes a correct system, which is that the internal market must first be supplied and then the export is authorized. But the industry asks for authorizations that are not just monthly, which will allow them to look for new clients, better prices and more stable forecasts,” Carbajales considered.
However, he mentioned that there was progress in this matter: “Where this was done was in trans-Andean crude oil exports. The first to export by pipeline is YPF with some partners via Otasa, in fact it already started with low volumes after 17 years, and with Vaca Muerta Norte it will expand. That came with a resolution of the Secretary of Energy, which made a systemic balance of supply and demand, and came to the conclusion that, if the market is supplied with crude oil, firm exports are allowed for up to a year. It is a first flexibility that producers ask for.”
For the sector, Allowing incremental production to be exported at international prices will work as an incentive: “Companies did a lot for infrastructure to increase exports. The ideal is to align prices with international prices and in that case, look for other mechanisms for the formation of internal prices, such as stabilization and compensation funds that countries like Norway have.” Along the same lines, Carbajales added: “The international leading companies look at the geological resources of Vaca Muerta, but they also look at the prices, and on a global board, they decide where to invest.”
Source: Ambito
