The state-run oil company YPF increased production last year but it was not enough to make up for declines in the sector as a whole and the country continued its downward trend in oil and gas production.
Crude output decreased 1.4 percent last year to 30.8 million cubic metres while gas production dropped 0.5 percent to 41.4 billion cubic metres, according to figures released yesterday by the Energy Secretariat.
The annual figures come after a December with mixed results in which oil production dropped 1.2 percent and gas production rose 0.9 percent, both compared to the same month last year.
All companies saw negative results last year both in gas and oil production, with the exception of YPF and Pan American Energy (PAE). YPF’s gas production rose 12.5 percent and PAE’s 0.3 percent, while YPF’s oil production rose 8.8 percent and PAE’s 2.6 percent.
“There’s a wide contrast between YPF and other companies. YPF put a lot of effort into recovering gas and oil production in their conventional wells as well as developing Vaca Muerta, where they are seeing some positive results. Other firms aren’t making such an effort and are awaiting political and economic changes or a different regulatory framework,” Martín Scalabrini Ortiz, a project engineer specializing in oil and gas, told the Herald.
Petrobras saw the largest drop, 31.9 percent down in oil and 6.7 in gas, as it sold to YPF its share in the Puesto Hernández area which accounted for 34.5 percent of its oil production and 1.8 percent of its gas. Chevron’s oil production dropped 21 percent, followed by Sinopec (13.3 percent) and Pluspetrol (4.7 percent). Apache’s gas production dropped 5.8 percent and Total Austral’s 5.9 percent.
“We would be on the right track if at least we had been able to stop the drop. Argentina needs to start producing more oil and gas,” Jorge Lapeña, a former Energy secretary, told the Herald.
“The drop would have been steeper if there hadn’t been a decrease in diesel and fuel consumption due to slower economic growth.”
Fuel and lubricant imports dropped four percent last year, totalling US$10.9 billion, after growing 16 percent in December. Meanwhile, fuel and energy exports decreased 18 percent in 2014 and totalled US$4.6 billion, after a 35 percent drop reported in December. Fuel sales dropped one percent last year and 4.1 in December and diesel sales decreased 5.1 percent in December and 2.4 percent last year.
Lower oil prices, new challenges
The accumulated drop in oil prices so far this year opens the question of what will be the companies strategy regarding investment into new projects, with shale mega-reservoir Vaca Muerta as the main objective needing more funds in order to be exploited. Experts consulted by the Herald agreed that Argentina remains isolated from the world trend due to the policies implemented by the federal government to avoid prices dropping in the domestic market.
Among those measures, the federal government launched last week a crude production “stimulus” plan to face the oil price slump. Companies which maintain or increase their production receive an economic compensation which could reach up to three dollars per barrel. The price of fuel has also fallen off five percent in the domestic market.
“Companies will try to maintain their production levels or even improve them. Argentina is isolated from the international scenario as here there are better prices of crude and that keeps us far from the price shock,” Sebastián Scheimberg, an economist and energy expert at PRO party think tank Pensar Foundation, told the Herald.
“YPF will go the extra mile to improve its numbers, as well as PAE and Plus Petrol.”
Oil jumped for a third straight session yesterday as the Organization of the Petroleum Exporting Countries (OPEC) forecast greater demand for crude this year than previously expected projected less supply from countries outside the producer grouping. Benchmark Brent oil futures settled up 54 cents, or nearly 1 percent, at US$58.34 a barrel and US crude futures finished up US$1.17, or 2.3 percent, at US$52.86.
“We don’t have the same scenario as other oil-exporting countries as the federal government decided to maintain the price of oil in the domestic market with several policies,” Scalabrini Ortiz said.
“Nevertheless, all firms are closely following the international scenario and all new developments.”
Source: Buenos Aires Herald