Page 6 - LatAmOil Week 46 2019

LatAmOil ARGENTINA LatAmOil
ExxonMobil’s cautious optimism
Daniel di Nigris, the lead country manager for Argentina at ExxonMobil (US), also touted Vaca Muerta’s outsize potential. “The resource has great quality. We have proven that wells have thesameorbetterqualitythanwellsintheUS,” he said.
But di Nigris also sounded a cautious note, saying that ExxonMobil was not having an easy time in Argentina. The economic crisis that the country began experiencing last year has led to price caps, tax hikes, capital controls and regula- tory uncertainty, all of which have complicated the company’s efforts to make plans and earn profits, he commented.
To date, Vaca Muerta fields have been rel- atively slow to develop. There are only about 1,000 wells in operation at fields in the shale basin. By contrast, US shale basins are home to tens of thousands of producing wells.
Shell’s financial concerns
For his part, Sean Rooney, the general manager of the local subsidiary of Royal Dutch Shell (UK/ Netherlands), noted that oil and gas operators were running into financial problems. Argenti- na’s shaky economy has caused domestic interest rates to soar above 60%, and local companies are having trouble accessing international capital markets, he explained.
“It is harder to invest in a country with chal- lenging economic and financial conditions,” Rooney said. “We hope that companies will come, but you have to finance them at compet- itive costs.”
One of the projects that has faltered because of inadequate access to financing is a planned pipeline that would serve gas fields in Vaca Muerta.
The government sees the scheme, which is likelytocost$2bn,asameansofsupplementing an existing pipeline and facilitating exports from the shale basin. But it has already postponed the tender for the project twice.
According to Rooney, these delays are under- mining the rationale for new exploration and development work. “Until the pipeline is built, it won’t be necessary to drill more gas wells,” he remarked.
Likewise, he said, the national oil company (NOC) YPF is likely to have difficulty covering the cost of building a new LNG complex. YPF cannot foot the estimated $5bn bill for the con- struction of a gas liquefaction plant, export ter- minal and related infrastructure on its own, but it cannot finance the project unless interest rates drop, he stated.
Even so, he said, companies working in Vaca Muerta have one key advantage – namely, the ability to learn from the experiences of com- panies that have developed other shale basins in other countries. These lessons have helped Argentinian developers cut drilling costs down by about 75% on the levels that prevailed in the first years of the US shale boom, Rooney explained.
“I am optimistic about the development of oil and gas in Vaca Muerta ... [When] the con- ditions are competitive, then we can develop a lot faster than [we] have done so far,” he said.™
Petrobras buys Tango LNG’s first cargo
BRAZIL’S national oil company (NOC) Petro- bras has been identified as the buyer of the first commercial cargo of LNG lifted from Tango, a floating gas liquefaction plant anchored near Bahia Blanca.
Industry sources told Reuters last week that
YPF, Argentina’s own NOC, had named Petro-
bras as the winner of a tender for the purchase
of the LNG cargo. The bidding process closed
on November 6. 
Drilling site in Vaca Muerta shale formation (Photo: Infobae.com)
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w w w . N E W S B A S E . c o m Week 46 21•November•2019