Repsol details cost of YPF nationalisation

Repsol details cost of YPF nationalisation

The BBC reports that despite Argentina nationalising Spain-based oil company Repsol subsidiary YPF, the company’s net profit was up 643 million euros, because of rising oil prices and growth in its liquefied natural gas business. That is less than Repsol’s first quarter net profit when YPF is included — 792m euros ($1.026bn; £637m), up 3.5 percent from a year earlier. Additionally, Repsol continues to explore legal challenges to Argentina’s move, the BBC said.

However, now that Argentina has nationalised YPF it must make the necessary investments in the Vaca Muerta play to make the takeover worthwhile for the country, some $3 billion would be required over the next three years to get the shale gas extraction started, according to the BBC’s Vladimir Hernandez. That poses a dillema for the economically underperforming South American country.

“According to Repsol, more could be achieved with more investment. The firm insists that some $25bn per year would be needed to exploit Vaca Muerta’s shale oil and gas potential. This, the company believes, could double the Argentine production in 10 years,” writes Hernandes. “But this would require some 3,000 shale oil and gas wells in an area where there are only 28 at the moment.

“Without Repsol, the government might well look to other foreign investors for help to make it happen. But Daniel Kokogian, a geologist who works as an advisor for several foreign energy companies in Argentina, said some companies would be concerned about how they might be treated in the future, following the renationalisation of YPF.”

More on Argentina’s nationalisation of YPF and the stand off with Repsol here at the Daily Energy Dump.

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