US firms investing in YPF seek laws protecting oil investment
Four U.S. firms have indicated interest to invest in oil firm YPF of Argentina. The government of Argentina identified the four companies as Apache, Chevron, ConocoPhillips, and Exxon-Mobil.
Sources said that these four are requesting assurance that Argentina will pass regulations that will protect investor interest, allow payment of earnings, and permit export of crude oil production. The U.S. firms will commence discussions with Miguel Galuccio, YPF Chief Executive Officer as soon as their requests have been granted.
On one occasion, Galuccio said that a law guaranteeing investment will likewise address Repsol’s plan to sequester the majority share in YPF.
Repsol’s pronouncements had very little impact on the U.S. companies, although they are really pushing for approval of Argentine laws that would protect their oil investment and ensure crude exports and earnings pay-out.
While Argentina seems open to the request, the government deemed it appropriate to defer action until the end of 2012. To date, the Central Bank of Argentina is short of reserves, so dollar payouts will only deplete its already scarce reserves. On the other hand, it will have to prioritize local crude demand before it could even export the commodity.
According to state sources, Argentinean Ambassador Jorge Arguello and U.S. counterparts had their initial investment talks in Washington. This happened following the passage of a law nationalizing YPF. A talk between Julio De Vido and U.S. company representatives ensued in Buenos Aires.
Galuccio was touring the U.S. to lure companies who are intent on investing in oil firms like YPF, which Argentina is trying to revive and lead towards a position of oil market dominance.
One of his ambitious plans for YPF is for it to step up production levels to high capacities it was enjoying about 15 years ago. To achieve this, Gallucio projects an initial investment of $3.5 billion.
He added that financial plans include initially plowing back YPF earnings into the company. Subsequently, it will distribute dividends based on company earnings. He assured that management will secure the interest of its stockholders.
Other plans include focusing on increased oil exploration in order to achieve a 42 percent growth in output within a 5-year time frame. More drilling equipment will be acquired as YPF projects to drill about 1,400 wells in the medium-term. It also foresees creation of about 10,000 new jobs.