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YPF Advances $2.5 Billion Pipeline Project to Spur Vaca Muerta Shale Oil Exports

5/14/2024

(P&GJ) — YPF SA, Argentina’s foremost oil and gas producer, is advancing plans for a $2.5-billion cross-country pipeline project, aimed at tapping into the rich potential of the Vaca Muerta shale region, Buenos Aires Times reported.

The recently approved Vaca Muerta Sur pipeline signifies a notable step forward for YPF in its efforts to support crude oil exports from the expansive shale reserves in Patagonia.

The proposed Vaca Muerta Sur pipeline, spanning from Neuquén province to Punta Colorada, is projected to play a pivotal role in evacuating crude from the heart of the shale region to loading terminals. With an anticipated capacity of 180,000 barrels per day by 2026, the pipeline holds the promise of unlocking substantial value from Vaca Muerta’s crude resources.

Under the leadership of Max Westen, YPF’s head of strategy and business development, the company is actively soliciting bids from contractors for the construction of the pipeline. This venture underscores YPF’s commitment to not only spearhead drilling activities in Vaca Muerta, but also to facilitate essential infrastructure development, including pipelines and a liquefied natural gas (LNG) plant, in collaboration with industry partners.

The approval of the environmental permit signals a pivotal moment for YPF, opening avenues for collaboration within the oil industry, Westen told Buenos Aires Times. With burgeoning interest from potential partners, discussions are underway to propel the project forward.

RELATED: Argentina’s YPF to Invest $3 Billion in Shale, Eyes LNG Facility Expansion in 2024

The Vaca Muerta Sur pipeline is poised to address the primary bottleneck hindering the full exploitation of Vaca Muerta’s immense potential. Often likened to the Permian Basin in the United States, Vaca Muerta has long awaited the necessary infrastructure to unleash its full capacity.

While Argentina has made strides in bolstering its energy infrastructure, particularly with the construction of a new trunk line for shale gas, the focus is now shifting towards optimizing crude oil exports. YPF, along with other industry players, is directing its efforts towards the oil window of Vaca Muerta, eyeing swift returns to bolster the nation’s economy.

Already, YPF has resumed crude oil sales to neighboring Chile, signaling the region’s increasing prominence in the global energy market. Investments are also underway to enhance existing facilities for crude oil shipment from Argentina’s Atlantic coast, paving the way for expanded export capacity in the coming years.

Emphasizing the strategic importance of the Vaca Muerta Sur pipeline, Westen underscores YPF’s unwavering commitment to prioritize this project above all others, as reported by Buenos Aires Times. The company’s ambitious targets aim to capitalize on the vast potential of Vaca Muerta, driving both production growth and economic revitalization.

Amidst these developments, YPF’s new management, appointed by President Javier Milei, is strategically divesting from aging conventional oil fields to refocus resources on Vaca Muerta. This strategic realignment aims to bolster the company’s stock performance and reinstate dividend payments to shareholders.

Attracting significant interest from investors, YPF recently showcased its investment opportunities at roadshows in Houston and Calgary, garnering attention from approximately 70 companies.

Bids are projected to be received by June, with sales anticipated to conclude by year-end, signaling a significant development in YPF’s role within Argentina’s evolving energy sector.

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