Pan American Energy (PAE) announced it will invest US$1.4 billion in Argentina in 2016 to exploit conventional and unconventional hydrocarbons in several reservoirs across the country.
Of the US$1.4 billion, US$900 will be spent on the San Jorge basin in Neuquén, while US$300 million will be invested in Neuquén and US$70 million in Tierra del Fuego. The other US$130 million will be destined for capital investments in the country, the company said.
“The investment will enable a balance in the activity, maintain jobs and carry out a sustainable development of the communities in which the company operates, considering the international context of the sector,” PAE said in a press release.
The investment was announced by President Mauricio Macri and PAE head Marcos Bulgheroni at the Pink House. Bulgheroni highlighted the company’s “investment responsibility” in the country, while Macri warned of the situation of the energy sector in the country following the drop in oil prices.
“The industry is seriously affected by the changes on oil prices. That’s a challenge for us. We have to prove we can keep on producing despite the price has dropped,” Macri said. “The energy sector has great opportunities to grow. We not only have to defend existing jobs but also create new ones.”
Macri said energy is a “critical issue” for Argentina and accused former president Cristina Fernández de Kirchner of carrying out a “bad energy policy” during the last decade, which lead the country to “run out” of energy to keep developing.
“We have to lower our energy consumption. It will take between five and six years to have a sustainable and diversified energy matrix. There’s a long road ahead and if we can’t save energy, we may not grow at the speed we need,” Macri said.
Pan American operates in four hydrocarbon basins in Argentina, including the country’s most productive oil fields Cerro Dragón in the San Jorge basin. Pan American extracts shale gas in Neuquén and started exploring for unconventional fossil fuels there in 2011.
The company has reported a 34 percent rise in its oil output in Argentina from 2001 and 2015, bringing it to 108,000 barrels per day. Its production of gas rose 67 percent to 19 million cubic metres per day in the same period. The company says it invested US$13 billion in the country over the last decade.
The investment announcement comes after Exxon said last month it was considering investing up to US$10 billion in shale projects over 20 to 30 years in Vaca Muerta.
The oil giant has so far spent US$200 million in the world’s second-largest shale gas deposit and plans to invest another US$250 million in coming months on a pilot project in Neuquén, done jointly with the provincial energy company Gas y Petróleo de Neuquén. If the pilot project is successful, the company will start full development
In its comprehensive assessment of global shale resources, published in 2013, the US Energy Information Administration estimated that Argentina has the world’s second-largest resources of shale gas (after China) and fourth-largest shale oil (after Russia, the United States and China).
Argentina’s technically recoverable shale gas and oil resources amount to just over and just under 10 percent of the world total respectively, according to the EIA.
Date: July 15, 2016