Argentina's YPF to boost downstream capacity to handle Vaca Muerta output

Buenos Aires — Argentina's state-led YPF said it plans to step up investment in its downstream business to boost capacity for handling growing output from the giant Vaca Muerta shale play.

"YPF's downstream [unit] will lead the industrialization of Vaca Muerta, adding greater value to unconventional crude and gas through its industrial complexes and petrochemical plants," CEO Sergio Affronti said in a statement late June 18. "Our vision is to create a more diverse, balanced and integrated company."

YPF has a 50% share of the country's oil refining capacity and a 56% share of diesel and gasoline sales, providing most of the crude from its own fields.

On June 17, Affronti said the company will focus on reviving oil and gas production from a slump during the coronavirus-spurred lockdown of the economy. The lockdown, which began March 20 and is due to end June 28, slashed demand for oil, forcing YPF to reduce crude processing and output at its refineries, leading to a decline in production from its fields, including in Vaca Muerta.

YPF's oil output fell 1.2% to 233,728 b/d in the first four months of 2020 from 236,476 b/d in the year-earlier period, according to the latest data from the Energy Secretariat. Over the same period, its gas production dropped 4.1% to 36.7 million cu m/d from 38.3 million cu m/d, the data show.

To turn this around, Affronti said June 17 that YPF will step up the use of secondary and tertiary recovery techniques, such as polymer well injection, to sustain output from conventional reserves, while seeking growth by increasing drilling in Vaca Muerta, one of the world's biggest shale plays.

YPF invested $2.7 billion over the past decade in new units and improvements at its three refineries, which have a combined 320,000 b/d of processing capacity. This has allowed it to produce more premium diesel and gasoline, the company said. YPF also plans to use more shale oil and gas for stepping up petrochemical production, Affronti said.