YPF, Argentina’s state-run oil company and the leading producer in the Vaca Muerta shale region, is in discussions with US-based Energy Transfer regarding financing for a crucial cross-country pipeline, reported Bloomberg, citing sources.
This collaboration is pivotal for Argentina’s plan to enhance shale oil exports significantly.
The project, named Vaca Muerta Sur, is estimated to cost $2.5bn (2.3trn pesos) and is essential for YPF, which requires external financial support.
Energy Transfer, known for its pipeline operations in the US, is evaluating opportunities globally, including this Argentine venture.
Both companies have refrained from commenting on the ongoing negotiations, the news agency said.
YPF seeks to form a consortium with other oil drillers in the country that are also in need of increased transportation capacity to boost production.
Sources familiar with the matter told the agency that the aim is to attract additional partners once this consortium is established.
The pipeline is expected to propel Argentina’s global oil export share and contribute to economic growth.
The country is seeking to diversify its export base to build up foreign currency reserves and mitigate the impact of recurrent economic crises.
With a target to export around 500,000 barrels per day (bpd) of shale oil by the end of the decade, the Vaca Muerta Sur pipeline could be transformative.
Currently, exports from Vaca Muerta are slightly above 100,000bpd, hindered by logistical bottlenecks and the need for truck transportation in some areas.
YPF has already commenced construction on a smaller 128km pipeline to connect shale fields to the town of Allen in Rio Negro province.
The larger project, potentially involving Energy Transfer, would extend 437km from Allen to Punta Colorada on the Atlantic coast, where a new port facility is planned.
In March, YPF announced a $3bn investment in shale operations as part of its $5bn capital expenditure for 2024.
