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Iraq Sees No Need For Further OPEC Oil Output Cuts

Iraq Sees No Need For Further OPEC Oil Output Cuts

As OPEC and non-OPEC producers…

Pan American Energy Invests $1.2B In Argentina This Year

Vaca Muerta

BP subsidiary Pan American Energy will invest around US$1.2 billion in Argentina this year, including US$400 million in the Vaca Muerta shale formation, a company spokesman told Reuters on Tuesday.

Last year, Pan American Energy’s investment budget was US$1.4 billion, of which US$300 million in the Neuquen province, home of the Vaca Muerta shale.

Pan American Energy is the latest in a string of Argentina-based companies and international supermajors that have announced their 2017 plans to invest in Vaca Muerta, which is thought to have the potential to be a star shale play.

Back in April, Argentina’s Energy and Mining Minister Juan Jose Aranguren said that total investments of between US$6 billion and US$8 billion in Vaca Muerta had been confirmed for this year alone. Argentina sees investments in the shale formation rising to US$12 billion-US$15 billion next year, and to US$20 billion annually from 2019 onward, according to the minister.

Exxon is one company that plans to speed up investment plans for shale gas drilling in Vaca Muerta. ExxonMobil Exploration Argentina (EMEA) has been present in Vaca Muerta since 2010. Chevron, too, has been developing areas together with Argentine oil company YPF. In Chevron’s non-operated Loma Campana concession in Vaca Muerta, 58 horizontal wells were drilled last year, and the drilling program is expected to continue this year.

Argentina’s Tecpetrol said in March that it would invest US$2.3 billion by 2019 in the first phase of the development of the Fortín de Piedra area in Vaca Muerta.

The sooner a company starts producing gas, the more pricing incentives they can get. In a bid to boost domestic gas development, Argentina has extended the pricing incentives through 2021. Producers will be paid US$7.50/MMBtu for their production by the end of 2018, and then the incentives would gradually decrease to US$6/MMBtu in 2021. Free market pricing is expected to come into effect in 2022, with prices expected to average US$4/MMBtu, or some US$1/MMBtu less than current market average prices, according to Platts.

Argentina is trying to boost its domestic shale gas output in an effort to reduce imports. The country’s natural gas production increased in 2015 for the first time since 2006, but Argentina is still a net importer of natural gas.

By Tsvetana Paraskova for Oilprice.com

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