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Each of the pads will support four wells. (Tra- Energy subsidiary, which operates a chain of 350
figura will also have the right to participate in filling stations. “We believe this transaction will
the establishment of two more pads if it wishes, help Vista accelerate its development in Bajada
according to the statement.) del Palo Oeste, contribute towards the supply
There are already 28 wells operating at the of Trafigura’s refinery and generate incremen-
site, which has been in production since 2018, tal crude oil volumes for export,” the company
and Vista has identified another 550 drilling commented.
targets. Miguel Galuccio, the CEO of Vista, made a
Meanwhile, the marketing agreement calls similar point, saying that the joint project would
for Vista to sell Trafigura 380,000 barrels per “contribute to generating more production, and
day (bpd) of light sweet Medanito grade oil each thus continue to expand energy exports essen-
month between July 2021 and December 2022. tial for bringing in the foreign exchange that
The commodities trader has agreed to pay a total Argentina needs, while continuing to supply the
of $25mn for the crude, with $5mn due upon the local market.” ™
conclusion of the deal and another four install-
ments of $5mn each when the second, third,
fourth and fifth drilling pads begin operating.
The agreements will not give Trafigura a
working interest in the concession. Instead,
Vista shall continue to serve as operator of the
project, with a 100% equity stake, while only
retaining rights to 80% of total production. The
company will also reduce its share of capital
expenditures, royalties and taxes to 80%.
For its part, the commodities trader will
secure rights to 20% of output and assume
responsibility for 20% of capex, royalties and
taxes. More specifically, it will invest about
$50mn in the 20-well drilling programme,
bringing the total value of the deal up to $75mn.
In its statement, Vista said it expected the
agreements to support its own plans for the con-
cession, as well as Trafigura’s plans for its 30,500
bpd refinery in Bahia Blanca and for its Puma Bajada del Palo Oeste (Image: Neuquén provincial administration)

OIL MARKETS
Canceled meeting leaves OPEC+ in disarray

MEMBERS of the OPEC+ group downed tools percentage reductions based on October 2018
this week, cancelling a planned July 5 meeting at production levels, giving the UAE a baseline
the last minute amid growing friction between of 3.168mn bpd, but the country’s production
key participants Saudi Arabia and the UAE. capacity has now risen to 4mn bpd and it wants
Riyadh has been pushing for anticipated this taken into account.
monthly production increases of 400,000 bar- While any such adjustment would be a devi-
rels per day (bpd) to be tied to a commitment ation from the course that has brought market
to extend the existing supply cut eight months stability and rising prices, Emirati officials have
beyond the current April 2022 end date. Mean- noted that the country has had to shut in a dis-
while, the UAE is digging its heels in on an proportionate amount of production capacity
extension pending the upward revision of its – 35% compared with the 22% average among
reference point for cuts. other members.
Without a consensus among members on the The UAE also has a point in terms of the base-
next steps, oil production from the group will line with Saudi Arabia being given a baseline of
stay flat, with 5.8mn output withheld from the 11mn bpd despite having produced an average
market despite a significant increase in demand of 10.38mn bpd during 2018, with October 2018
anticipated during the second half of the year. output running at 10.77mn bpd.
OPEC anticipates that oil demand will grow by Saudi oil production has only exceeded
around 5mn bpd between July and December, 11mn bpd twice in history – once in November
while S&P Global Platts has forecast growth of 2018 and once in April 2020, when it hit 12.1mn
8.8mn bpd between June and December. bpd as it launched a price war with Moscow,
The current agreement is based on sending prices into freefall. ™

Week 27 08•July•2021 www. NEWSBASE .com P13