2013 Argentina Blog: Energy and the Economy
During the energy and economy session, Argentina's minister of Industry gave an overview on the country's industrial position, while YPF head Miguel Galuccio discussed a plan for national energy self-sufficiency.
Minister of Industry, Argentina, Débora Giorgi
The minister of Industry of Argentina gave an overview of where her country stands industrially. Innovation, science, and technology are all coming together to make Argentine industry more competitive, she said, showing a slide with strong growth indicators over the last decade.
The government, said Giorgi, is fomenting domestic growth using a series of strategies: a policy of substitution of imports with local alternatives, thus developing local industry; public-private projects; promotion of strong internal demand inspiring investment; and support for small- and medium-sized enterprises (SMEs).
In terms of successes on the substitution of imports front, the minister gave several examples, including agricultural machinery, mining equipment, oil and gas technologies, and electronics.
In terms of support for SMEs and entrepreneurs, she told the audience 229,000 new small- and medium-sized firms were created since 2003. Of these, 60 percent were by people 29 and under.
President and CEO, YPF S.A., Miguel Galuccio
The CEO of Argentina’s biggest energy company opened by going over YPF’s strategic plan, which focuses mainly on pushing energy self-sufficiency in the country.
Following last year’s change of management, the company developed a 100-day plan. This was to stop decline in domestic hydrocarbon production, insure fiscal stability, begin developing Argentina’s shale potential, continue to exploit natural gas reserves, and develop a plan for $37-billion worth of investment over five years.
After one year, results, said Galuccio, spoke for themselves. YPF has 140 percent more drilling equipment and a 94 percent jump in investment that’s expected to reach $5.5 billion by end of year. Furthermore, he added, oil production grew 3 percent and gas production 4.2 percent.
Galuccio said 80 percent of investments over the past 12 months were financed with operating cash flow and 2013 financing is secured. Now the company’s looking at 2014, as well as seeking opportunities to access international debt markets.
In terms of Shale, Galuccio said while Argentina needs to focus on conventional hydrocarbon reserves, non-conventionals offer huge potential. The challenge, though, is “to make non-conventional conventional.” It needs to become the standard form of hydrocarbon energy production in Argentina, he said. YPF is taking steps to make this happen, broadening in-house expertise and development techniques.
YPF needs partners to help scale up technological logistics and financial resources. To this end, he said the country needs Chevron working in Argentina if it wants to accelerate development of the massive shale fields in Vaca Muerta and reduce the energy deficit.
Galuccio said the industry, and therefore the country, have significant challenges ahead. YPF has an important role in leading the reduction of the national energy deficit, but the company needs to be accompanied by partners and stakeholders. Argentina should give a warm welcome to foreign companies who want to invest in Argentina.
Watch the video of Giorgi's and Galuccio's presentations.