YPF is expediting its divestiture plan to sell stakes in offshore exploration projects and mature fields, while focusing on a massive LNG project aimed at starting exports in 2027. The company plans to cut $512 million in costs through 2026 and invest $5 billion in the upcoming year.
Argentina’s state-controlled energy firm, YPF, is expediting its divestiture strategy, which encompasses the sale of controlling stakes in offshore exploration projects in both Argentina and Uruguay. The initiative also involves reducing its holdings in mature fields and considering the sale of a gas distribution company, as stated by Chief Executive Officer Horacio Marin. The company currently holds exploration rights to seven offshore zones, six of which are located off the Argentine coast, with one in Uruguay.
Emphasizing the need to streamline operations, YPF plans to concentrate on enhancing production in Argentina’s prolific Vaca Muerta formation. This divestiture aligns with YPF’s aim to focus on significant undertakings, prominently featuring a massive liquefied natural gas (LNG) project intended to kick off the nation’s first LNG exports projected for 2027.
YPF is currently negotiating with a foreign oil major regarding the divestiture of part of its stake in an exploration block in Uruguay and plans to auction additional offshore interests. The CEO noted that while YPF will divest larger stakes, it intends to retain smaller portions of its offshore interests.
A significant investment decision pertaining to Argentina’s inaugural floating LNG facility is expected by June, which is pivotal for the LNG project’s initial phase aiming for a production capacity of 6 million metric tons per year through two production vessels. YPF seeks to maintain a 25% to 30% stake in the overall LNG initiative, envisioned to develop in three stages with an ultimate capacity of 30 million metric tons per year.
In the backdrop of these strategic moves, YPF successfully reduced downstream costs by $405 million last year and aims to slash an additional $512 million through 2026. The company reported a notable profit increase, rising to $2.39 billion from a prior loss of $1.28 billion. For the upcoming year, YPF plans to invest around $5 billion, aligning with its forecasts for 2024.
In summary, YPF is restructuring its focus by divesting from offshore exploration and mature fields while shifting its attention toward the significant LNG project aimed at initiating exports by 2027. The company’s strategic investments and cost-cutting efforts indicate a robust recovery, with increased profitability and planned substantial investments in the energy sector. Ultimately, YPF is positioning itself for long-term growth in Argentina’s energy landscape.
Original Source: www.marketscreener.com
