YPF prepares to export light crude from shale play

Argentina's state-controlled YPF is preparing to start regular exports of light crude from the Vaca Muerta shale play.

The company already exported 500,000 bl of 34°API Medanito crude from Vaca Muerta in March. The cargo, purchased by Shell, was the result of maintenance at the 189,000 b/d La Plata refinery that freed up supply for export. The future export blend is likely to have a quality of at least 40°API, encompassing flows from more than one producer, oil industry participants say.

The regular exports of light crude from Vaca Muerta are expected to begin in the second half of 2019, and pick up in earnest closer to the end of the year, according to a YPF official.

"Given current conditions, the first thing that will happen is that we will stop importing crude and, assuming the current levels of production are maintained, there will be a need to begin exporting crude from Vaca Muerta toward the end of the year," the official said.

Marketing details have yet to be hammered out, but much will depend on how much crude becomes available.

Argentina´s crude production—in large part from increased activity in Vaca Muerta—is increasing at a time when two of the country's refineries are stopped.

The 40,000 b/d San Lorenzo refinery that was once controlled by bankrupt Oil Combustibles has not restarted since YPF took control of the firm's assets in October 2018. The 30,500 b/d Bahia Blanca refinery once owned by Brazil's state-controlled Petrobras is also halted since Trafigura purchased it from Argentinian firm Pampa Energia last year.

YPF has two refineries besides La Plata, 105,000 b/d Lujan de Cuyo in western Mendoza province and 25,000 b/d Plaza Huincul in Neuquen province. The company also holds a 50pc stake in the 32,000 b/d Refinor refinery in northern Salta province.

Axion, a 50:50 joint venture between BP and Bridas, controls the 90,000 b/d Campana refinery in Buenos Aires province, while Raizen, a 50:50 joint venture between Shell and Brazilian conglomerate Cosan, has a 110,000 b/d refinery in Dock Sud, also in Buenos Aires province.

Upstream, YPF is refocusing on oil and away from natural gas because of a market imbalance that has pushed down gas prices in the domestic market.

YPF operates three main oil-focused joint ventures in Vaca Muerta: Loma Campana with Chevron, Banduria Sur with oil services giant Schlumberger, and La Amarga Chica with Malaysia's state-owned Petronas.

The one exception is El Orejano, a tight gas-focused play that YPF operates in partnership with petrochemicals firm Dow.

Argentina's crude production increased 3.7pc year on year to 501,609 b/d in the first quarter, according to the latest data from the energy secretariat. Natural gas production rose 4.8pc to 130.9mn m3/d (4.6bn cf/d).