LatinNews Daily - 08 March 2024

*Argentina’s state oil firm YPF has announced that it will invest Ar$3bn (US$3.5m) this year in the Vaca Muerta shale fields in the southwest of the country, as part of a wider Ar$5bn investment plan for 2024. According to a YPF statement, the Vaca Muerta investment is the biggest in its history. The investment fits within a four-year strategy dubbed the “4x4 Plan”, which aims to transform YPF into a “world class shale company” and “set records in oil and gas production in Argentina to become a major exporter of hydrocarbons by 2030”. The plan rests on four pillars: acceleration of oil production in Vaca Muerta; financial discipline in the management of investments; the maximisation of operational efficiencies in businesses; and the liquified natural gas (LNG) project in Argentina. The latter represents the construction of the first liquefaction plant in Argentina, allowing the country to export approximately Ar$15bn worth of gas annually from 2032 onwards, according to the statement. In terms of oil, YPF expects to increase production from 97,000 barrels per day (bpd) in 2023 to 250,000 bpd in 2027 through development of the Vaca Muerta fields – meaning 80% of total oil production will be “unconventional”, coming from shale. In terms of financial discipline, YPF “seeks to significantly streamline its operating costs”, with a 50% reduction in production costs over the next two years and the redirection of around Ar$800m of investment to the development of Vaca Muerta. The company projects 2024 net debt levels between 1.5 and 1.7 times the adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA).