12 May 2016, Houston — Argentina aims to stop importing light crude this year and improve domestic refining operations as it moves further down the road toward energy self-sufficiency, Energy Minister Juan Jose Aranguren said on Thursday.
Operators working in Argentina will continue to export oil, mostly Escalante heavy crude, he told reporters on the sidelines of an industry conference in Houston.
But more refining of domestic light crudes and larger and more regular gas supplies from Bolivia would help the South American country cut imports of costly liquefied natural gas (LNG), gas oil and crude.
The Argentine government is in talks with local refineries, encouraging them to buy more domestic light crude and import less after a 200,000-barrel cargo of a rare light crude was exported last month to drain inventories that were not bought by state-run oil firm YPF, he said.
“Locally produced crude should be given priority in order to avoid a reduction in jobs and tax revenue,” Aranguren said. “The domestic price goes from $55 to $67.50 per barrel depending on the crude type, which means it would be convenient to sell production in the domestic market.”
President Mauricio Macri promises to increase investment in the oil sector, particularly in renewable energy and the sprawling Vaca Muerta shale formation in Patagonia, as part of his campaign to reverse Argentina’s status as a net oil importer.
Argentina has been running an energy deficit since 2011, draining foreign exchange reserves.
But in a low oil price environment, foreign companies are uncertain that Vaca Muerta will be profitable and have been focusing on reducing drilling costs, executives said.
Macri was elected in November on a platform of eliminating currency and trade controls in a bid to increase investment. His election followed eight years of interventionist policies under previous leader Cristina Fernandez, who nationalized YPF in 2012.
“The country disconnected itself from the international market and lost its competitiveness,” the minister said.
In five or six years, Aranguren said, Argentina should be able to stop importing liquefied natural gas, only preserving gas imports from Bolivia contracted to 2027 while limiting gas oil purchases for the winter season.
Argentina will hold a tender next week for 1,000 megawatts of renewable energy, part of the plan to install 10,000 megawatts of new cleaner power capacity by 2025, Aranguren said. He expects an investment of some $2.1 billion for the first phase.
*Marianna Parraga, Hugh Bronstein & Anthony Esposito; Editing – Cynthia Osterman & Tom Brown – Reuters