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After the first part of the visit to the United States described as successful by the Government after reaching an agreement with the Inter-American Development Bank and having a positive view of the meeting with representatives of the White House, the main course for Serge Massa arrives at the end.
On the one hand, on Monday the head of the Palacio de Hacienda will meet with the head of the International Monetary Fund, Kristalina Georgieva and with United States Treasury authorities.
This Friday, Massa will take a strong step towards another of the Government’s objectives. Now with a scheduled date for the completion of the first stage of the Nestor Kirchner gas pipeline (mid-2023 as expected), the need for new investments by oil companies in Vaca Muerta, the world’s second largest unconventional gas reserve and the fourth largest oil of the same type, becomes urgent.
That is why, on Thursday afternoon, the Minister of Economy traveled with the Secretaries of Mining and Energy, Fernanda Avila and Flavia Royón, to Texas, Houston. There he will meet the leading companies in the energy sector.
The expectations of the oil companies
With more doubts than certainties they traveled there in the last hours, Argentine Exxon executives who join the leadership of the company in the United States (Thomas Schuessler, Senior VP at Exxon Mobil; Bryan Pickett, General Manager for Argentina, Daniel De Nigris, General Manager ExxonMobil Exploration Argentina and Matías Szapiro (Manager of Public and Government Affairs) , Pablo Gonzales and Alejandro Lew from YPF (President/Director and Financial Manager, respectively), Juan Martin Bulgheroni and Daniel Felici from PAE (Vice President of Company Operations and Corporate VP) and Agustín Gerez from Enarsa.
A breakfast is planned for the formal presentation of the Minister of the Economy and a lunch with the executives that make up the Chamber of Special Oil Operations Companies.
Investments in Vaca Muerta: Massa will meet tomorrow with the main US oil companies.
The truth is that there will also be other meetings in the same sensebut have not yet been confirmed by the Treasury.
Currently, the industry invests in the country between 6 and 7 billion dollars a year. But Vaca Muerta never really takes off. For the mega-field to become one of the most important businesses in Argentina, which could be the solution to the need for foreign currency income in addition to the guaranteed internal energy supply for the next 150 years, the companies estimate that the necessary investment should become 20 billion average per year.
iProfessional consulted several representatives of the sector and although there is a consensus between the Government and the companies about the enormous opportunity that the deposit represents, the question is:
Are the oil companies ready to promise more investment in Argentina today?
The answer is no. Today the conditions are not in place to ensure greater income from the companies that already have a commitment to Vaca Muerta.
The field today evacuates an average of 270,000 barrels of crude per day, representing 55% of the country’s total production.
For the proposal to be interesting for the oil companies, an output of about 175 thousand barrels more daily on average, whose objective would be the export.
Today, the industry invests between 6 and 7 billion dollars a year in the country. But Vaca Muerta never takes off
dowhy to export? . Because the capacity of the domestic market is covered. If there is more production, it is purely for export. With an export at a competitive value sustained in the long term, importing in the 2 coldest months of the year in Argentina would not be a problem.
doThat real growth can be promised as a point to be met within the next 2 and a half years?
Not today. The infrastructure for the evacuation of oil from Vaca Muerta is at its limit. Also for gas evacuation. With the Gas Plan (21/24), all companies expanded their production. With the Néstor Kirchner Gas Pipeline, the possibility of an output of 11 million more cubic meters can be foreseen by the middle of next year and with compressors it could reach 20 million. That is why companies wait for deadlines to be met.
There is currently no safe regulatory and fiscal framework for companies. The Minister of Economy will detail before investors the scope of decree 277 that promotes the availability of foreign currency applied to an increase in production.
The oil companies consider that, although the decree goes in the right direction, it remains halfway. The free access to foreign exchange is for 20% of surplus production over last year’s baseline. With which, what the company invests from now on to achieve greater production is not contemplated in that decree.
Would any investor in the world dedicate a dollar to a business that does not guarantee the possibility of taking it out for reinvestment, for the distribution of dividends or for whatever he considers? No, because the investments compete within a global board. If what is obtained after an investment (which is also in the millions in this industry) cannot be reused or withdrawn in a stable framework, the investment ceases to be a business.
To achieve higher production more technology is needed. And that matters. Import restrictions today are a problem for the industry. That is why the Government will give details in the meetings of the scope of the program “Green Channel“Precisely so that the oil companies can import equipment and machinery with more facilities, skipping bureaucratic processes in Customs. The Minister of Economy announced it a couple of weeks ago in Neuquén. The oil companies are waiting for details because today they are also affected by the limitations of income and not only because of procedural obstacles.
The infrastructure for the evacuation of oil from Vaca Muerta is at the limit
The obstacles facing Vaca Muerta
In short, the industry is convinced that Dead cow It has the natural conditions, the human resources, and the proven productivity to become the big business in Argentina and the solution to the lack of foreign exchange that the country faces.
But consider that it is impossible to advance In this sense, if the macroeconomic conditions and the certainty of access to financing and the free availability of foreign currency are not given, within a stable long-term regulatory and fiscal framework, for a business that, in addition to being at risk with the geography, recovers its investments only after 10 years.
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