Equinor Explores Divestiture of Argentinian Shale Assets

Equinor is negotiating the sale of its stakes in Argentinian shale assets to YPF, its state-owned partner. The company has begun evaluating these assets as part of a strategic realignment toward oil and gas. Under the new administration, investments in Vaca Muerta may hinge on economic reforms, such as lifting capital controls, amidst a growing interest in the region’s shale resources.

Norwegian energy company Equinor has initiated discussions regarding the potential sale of its stakes in Argentinian shale operations to YPF, Argentina’s state-owned oil firm and its partner in these assets. According to an unnamed source cited by Bloomberg, Equinor, which has been active in Argentina since the 2010s, holds interests in both offshore and onshore operations, notably in the Vaca Muerta shale formation situated in Neuquen province, encompassing one exploration license and one producing block.

The right of first refusal for any stake sale rests with YPF, as indicated by the Bloomberg source. Additionally, Equinor has begun evaluating its shale assets, highlighting a strategic divestment aligned with its overall business objectives. Reflecting broader trends among European oil majors, Equinor is refocusing on oil and gas operations while scaling back its commitments to renewable energy to enhance cash flow and shareholder returns.

The divestiture of these shale assets in Argentina may suggest that Equinor regards this segment as non-core to its strategy. Interest in the Vaca Muerta formation has surged following the election of libertarian president Javier Milei a year ago. However, the new administration has ceased state funding for crucial pipeline and infrastructure projects, compelling companies to seek private investments, alongside the introduction of tax incentives in a newly favored free-market framework for the economy. Analysts have stated that prior to substantial investments, companies desire the removal of capital and foreign currency controls to support the export initiatives from Vaca Muerta.

Equinor is exploring the sale of its Argentinian shale assets, engaging with YPF regarding potential transactions. This reflects a strategic shift towards prioritizing oil and gas operations while reducing investments in renewables. The evolving economic climate in Argentina under President Javier Milei may present both opportunities and challenges for foreign investors in the Vaca Muerta formation, requiring adaptive strategies moving forward.

Original Source: oilprice.com