Equinor ASA is exploring the sale of its shale oil assets in Argentina to YPF SA. Preliminary discussions are taking place, with possible preferential rights for YPF. The move reflects Argentina’s focus on expanding shale production under President Javier Milei, despite the challenges faced by foreign investors in the region.
Equinor ASA is reportedly in discussions to sell its stakes in shale oil assets located in Argentina to its joint venture partner, the state-owned company YPF SA. Sources indicate that these talks are in the initial stages and that YPF possesses preferential rights regarding any potential divestiture. Moreover, Equinor, which stands as Norway’s largest oil producer, has initiated an evaluation and appraisal process for these assets.
Recent reports from the Argentine energy publication EconoJournal indicate that Equinor has commenced proceedings to divest its shale resources. This move coincides with the pro-growth energy policies instituted by Argentine President Javier Milei, which aim to boost production in the Vaca Muerta shale region to one million barrels per day within several years, significantly above the current production levels.
Under Mr. Milei’s administratively selected management team, YPF is prioritizing investment in the shale sector while divesting from aging conventional oil operations. YPF has recently established a remote operations center for shale in Buenos Aires and has purchased a majority interest in a shale-gas field from Exxon Mobil Corp and Qatar Energy for around $300 million.
However, the unpredictability connected with operating in Argentina has compelled numerous international oil enterprises to either withdraw entirely or minimize their investments in the nation, thereby allowing domestic companies to take charge of shale development. Equinor holds a 30 percent stake in the Bandurria Sur area within YPF’s key shale production zone, while YPF owns a 40 percent stake in the same area. Additionally, both companies maintain equal stakes in the Bajo del Toro project, situated in a less mature exploratory sector further north.
In summary, Equinor ASA is currently considering the sale of its Argentine shale oil assets to YPF, with early negotiations underway. This potential divestment aligns with Argentina’s renewed focus on enhancing shale production under President Javier Milei’s administration. Despite the appealing market conditions, the inherent risks in the Argentine oil sector continue to present challenges for foreign investments.
Original Source: www.batimes.com.ar
