Equinor Engages YPF in Discussions for Argentine Shale Assets Sale

Equinor ASA is in talks to sell its Argentine shale assets to YPF SA, its joint venture partner. President Javier Milei’s policies are driving growth in the Vaca Muerta region, which aims to significantly increase oil production. Nonetheless, foreign investment risks have caused many companies to reduce their presence in Argentina, leaving local firms to dominate the market.

Equinor ASA is engaged in discussions regarding the sale of stakes in its Argentine shale oil assets to its joint venture partner, YPF SA, a state-run oil company. These early-stage negotiations imply that YPF holds preferential rights in the divestment process, as indicated by a source who requested anonymity due to the confidential nature of the discussions. Furthermore, Equinor is undertaking a valuation and assessment of these assets, as confirmed by another insider.

Recent reports from EconoJournal highlight Equinor’s initiation of a divestiture process involving its shale assets. The market-oriented strategies implemented by Argentine President Javier Milei are driving significant growth in the Vaca Muerta shale region, with the government aiming to increase crude oil output to one million barrels per day in the coming years, more than double the existing production levels.

Under President Milei’s leadership, YPF is strategically concentrating on the shale sector while divesting from older, conventional oil fields. The company has recently established a remote shale operations center at its Buenos Aires headquarters and has secured a majority stake in a shale gas field from Exxon Mobil Corp and Qatar Energy for an estimated $300 million.

Despite the promising opportunities, the risks inherent in operating in Argentina have induced several foreign oil companies to either withdraw from the market or maintain minimal investments, limiting active participation to local firms. Equinor currently holds a 30 percent stake in the Bandurria Sur area, a zone that is central to YPF’s shale production, while YPF maintains a 40 percent stake in the same area. The two firms share equal ownership of the Bajo del Toro project, situated in a less-developed, exploratory region.

Equinor ASA is currently exploring the sale of its shale oil assets in Argentina to YPF, a move supported by favorable government policies aiming for increased production in the Vaca Muerta region. While YPF is prioritizing growth in shale, the risks associated with operating in Argentina continue to challenge foreign investment in the sector. The partnership between Equinor and YPF remains pivotal for both companies in navigating this evolving landscape.

Original Source: www.batimes.com.ar