Argentina's YPF says billions needed to revive output

Tue Jun 5, 2012 7:04pm EDT
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By Karina Grazina

BUENOS AIRES (Reuters) - Argentina energy company YPF (YPFD.BA: Quote) needs to invest $7 billion a year to boost flagging natural gas and oil output by more than 25 percent in five years, officials at the renationalized company said on Tuesday.

Center-left President Cristina Fernandez seized control of YPF from Repsol (REP.MC: Quote) in April and blamed the Spanish oil major for years of inadequate investment that made the country increasingly reliant on pricey imports.

YPF, in a report sent to Buenos Aires Stock Exchange, said its plans would require an annual investment of $7.0 billion between 2013 and 2017 - most of which would come from the company's own resources.

"The decline of both oil and natural gas under Repsol-YPF accounted for 80 percent of the country's total production loss," said Chief Executive Miguel Galuccio - a former executive at global oilfield services giant Schlumberger Ltd.

"YPF needs to recover its leadership and vision in the country," he said in a speech to launch the corporate plan, vowing to make the company "professional and competitive."

Galuccio said 1,000 wells would be drilled next year - a level not reached by the company since 1996 - as the company aims to push up annual energy production by 6 percent.

That would represent a 26 percent increase by 2017 to reach 216 million barrels of oil equivalent (boe), bolstering current flows by rejuvenating mature oil fields and starting to tap hefty shale resources.

YPF, which registered a net profit in 2011 of 5.3 billion pesos ($1.1 billion), did not give more details about how it would be able to meet the estimate of required investment to reverse Argentina's energy shortfall.   Continued...

A flag with the YPF logo is waved in front of the Argentine Congress in Buenos Aires, April 25, 2012. REUTERS/Marcos Brindicci