December 11, 2013
Pemex confirms talks with YPF over Vaca Muerta
Mexico’s state-run Petróleos Mexicanos (Pemex) confirmed yesterday that negotiations have started with state-controlled energy company YPF to be part of the Vaca Muerta shale project in Neuquén.
“There currently are informal conversations between Pemex’s director and YPF’s head Miguel Galuccio. So far there has not been any announcements to the board but I think it would be an interesting alliance,” Fluvio Ruiz Alarcón, adviser to the board of Pemex, said yesterday. “We have discussed an alliance with Repsol, YPF and Pemex before but now we could enter into a direct agreement.”
The Argentine government signed a deal with US oil company Chevron to exploit Vaca Muerta, a shale oil and gas formation, but Argentina is seeking more investors. Chevron will put in US$1.24 billion to launch a joint pilot hydraulic fracturing project in a new area known as “Enrique Mosconi.” If all goes well, a second phase in the project would require some 1,500 wells and US$15 billion that the two companies would split equally.
“We need to wait for further details. I imagine that a concrete evaluation of the project would have to be made, together with a profitability analysis, and that would take some months,” Ruiz Alarcón said. “An analysis of the possibilities of shale has to be done since the only data available comes from the United States.”
Nine percent of Pemex stocks are owned by Repsol, former owner of YPF before the company was expropriated in 2012 by President Cristina Fernández de Kirchner. The Spanish company has been trying to stop any investors in Argentina from persuing projects with YPF, but that wouldn’t be a problem for Pemex, according to Ruiz Alarcón.
“Pemex can be part of the project, there are no legal restrictions to make alliances in foreign countries. We have already done it in the US where we share a refinery with Shell,” Ruiz Alarcón said. “Our Administrative Council approved Pemex having a wider presence abroad since we are one of the largest companies in the world.”
YPF chief executive Miguel Galuccio had anticipated on Wednesday that Petróleos Mexicanos “would be a good partner” for the state-run Argentine company, telling the Bloomberg News agency that he had “many business meetings in the last few months” with Pemex’s CEO Emilio Lozoya.
In June, Pemex presented a US$5 billion non-cash compensation proposal to Repsol on behalf of Argentina, which the firm’s board rejected. Argentina’s government emphasized the proposal was not official
Pemex is the world’s fifth-largest crude oil producer but like Argentina is experiencing a decline in production at mature fields.
— Herald with Télam