YPF Accelerates Divestiture Plans and Focus on LNG Development
YPF is divesting from offshore exploration and mature fields to streamline operations, primarily focusing on a major LNG project projected to start exports in 2027. Following substantial cost reductions and a return to profit, YPF plans to invest $5 billion this year, aligning with its 2024 strategy.
YPF, Argentina’s state-controlled energy company, is accelerating its divestiture strategy which includes selling significant stakes in offshore exploration projects located in both Argentina and Uruguay. This plan also encompasses reducing its presence in mature fields and the potential sale of a gas distribution company, according to Chief Executive Officer Horacio Marin.
The company holds exploration rights in seven offshore locations, with six situated off the Argentinian coast and one in Uruguay. YPF is now focusing on increasing oil and gas production in the Vaca Muerta formation, a notably prolific region, as it pivots its attention towards large-scale developments, particularly a major liquefied natural gas (LNG) initiative set to commence the nation’s LNG exports in 2027.
YPF is engaged in discussions with a foreign oil major concerning the sale of part of its stake in an exploration block in Uruguay and is contemplating offering other offshore assets through a bidding process. Marin hinted that YPF intends to retain smaller stakes in these ventures while transitioning its focus towards larger projects.
As part of the LNG project’s initial phase, YPF aims to reach a final investment decision on their first floating LNG facility by June. This facility intends to achieve an output capacity of 6 million metric tons of LNG annually from up to two production vessels, with YPF expected to maintain a 25% to 30% stake in the entire tripartite LNG project, which is poised for a total capacity of 30 million metric tons annually and may involve collaboration with energy giant Shell.
Last year, YPF successfully reduced downstream costs by $405 million and aims to cut an additional $512 million in costs through 2026. The company’s profits surged to $2.39 billion following a prior loss of $1.28 billion, and it plans to allocate approximately $5 billion for investments this year, consistent with projections for 2024.
YPF is strategically shifting its focus towards enhancing oil and gas production while streamlining operations through divestiture, particularly in offshore projects. The company’s commitment to a substantial LNG initiative and significant cost reductions are aimed at solidifying its financial performance. YPF’s investment plans and partnerships are expected to bolster its competitive position in the energy market as it prepares for future growth.
Original Source: www.marketscreener.com
