YPF plans to divest offshore exploration projects in Argentina and Uruguay, focus on LNG initiatives, and streamline operations. The company aims to cut $512 million in downstream costs by 2026 and invest $5 billion this year while targeting first LNG exports in 2027.
YPF, Argentina’s prominent energy company, has announced plans to expedite divestiture that involves selling controlling interests in offshore exploration projects located in Argentina and Uruguay, as articulated by CEO Horacio Marin. The divestiture will also encompass mature fields and a gas distribution company to streamline operations and focus on significant developments, particularly a large liquefied natural gas (LNG) initiative aimed at commencing the country’s first LNG exports in 2027.
The company actively holds exploration rights in seven offshore regions, with six situated off Argentina’s coastline and one in Uruguay. With the focus on boosting oil and gas production from the Vaca Muerta formation, YPF seeks to optimize its portfolio. Discussions are ongoing with a foreign oil major to divest a part of its stake in an Uruguayan exploration block, which may be auctioned along with other offshore assets.
Marin indicated that a decisive investment choice regarding the inaugural floating LNG facility, part of the initial phase of the LNG initiative, is anticipated by June. This phase targets an annual output capacity of 6 million metric tons of LNG using one or two production vessels. YPF plans to retain a 25% to 30% share in this extensive LNG project, which is structured in three stages to achieve a total capacity of 30 million metric tons annually, with oil giant Shell potentially as a key partner.
Continuing cost-management efforts, YPF successfully decreased downstream costs by $405 million in the previous year and aspires to trim an additional $512 million by 2026. The company’s profit surged to $2.39 billion, recovering from a $1.28 billion loss the preceding year, while planning to allocate approximately $5 billion towards investments this year, consistent with projections for 2024.
In summary, YPF’s strategic divestiture plan aims to enhance operational focus by shedding offshore exploration projects and mature fields. With an eye on the liquefied natural gas sector, the company seeks to fortify its portfolio, enhance profitability, and cut costs, culminating in substantial investments aimed at long-term growth and the establishment of Argentina’s LNG exports by 2027.
Original Source: www.marketscreener.com
