YPF Accelerates Divestiture Plans, Focuses on LNG Development

YPF, under CEO Horacio Marin, is expediting a divestiture plan involving offshore exploration projects and mature fields, while focusing on large LNG developments. The company is negotiating stake sales and aims for significant cost reductions by 2026. YPF plans to invest $5 billion this year and achieve its first LNG exports by 2027.

YPF, Argentina’s state-controlled energy company, is accelerating its divestiture strategy under the direction of CEO Horacio Marin. This plan includes selling controlling stakes in offshore exploration projects located in Argentina and Uruguay, along with a reduction in mature fields, and eventually offering a gas distribution company for sale. YPF holds exploration rights in seven offshore regions, primarily concentrated along Argentina’s coast.

As YPF increases oil and gas production within the Vaca Muerta formation, its divestiture efforts aim to refocus on significant developments, notably a large-scale liquefied natural gas (LNG) project intended to launch the country’s initial LNG exports by 2027. The company is currently negotiating with a foreign oil major regarding a stake sale in an exploration block in Uruguay, which may be included in an upcoming bidding round, while retaining smaller stakes.

Marin highlighted the importance of finalizing investment decisions for the first floating LNG facility by June, as it marks a critical phase of the LNG initiative, aimed at achieving 6 million metric tons of annual LNG output capacity through a maximum of two production vessels. YPF plans to maintain a 25% to 30% stake in the overall LNG project, which aims for a total capacity of 30 million metric tons across three phases, potentially partnering with Shell.

In terms of financial performance, YPF reported significant cost reductions, saving $405 million in downstream costs last year, with an additional target of cutting $512 million by 2026. After a profitable year that saw profits rise to $2.39 billion from a $1.28 billion loss, the company is set to invest approximately $5 billion this year, aligning with projections for 2024.

YPF is strategically pivoting towards significant developments in oil and gas production while divesting from offshore exploration projects and mature fields. With plans to invest heavily in its liquefied natural gas project, YPF aims to streamline operations and enhance profitability while making substantial cost reductions. The company’s financial turnaround further solidifies its ambitions as a key player in the energy sector.

Original Source: www.marketscreener.com