YPF Faces Losses On Argentine Subsidy Changes
Argentina’s YPF is warning it faces losses due to a decision by the country’s Energy Secretariat to limit a subsidy scheme used to boost natural gas production, mainly from the Vaca Muerta formation, according to media reports posted January 30.
In a statement sent to Argentina’s National Securities Commission, the petroleum company said “the negative financial effect in 2018 would be approximately $60mn,” online media outlet Via Pais reported.
The Argentine government will continue to pay the difference between the market price for gas and the price obtained by companies that accepted Resolution #46 in March 2017 that allows them to receive $7/mn Btu for the gas they supply. The market price for natural gas in Argentina is now close to $4/mn Btu, according to Via Pais.
But the Energy Secretariat’s decision means that subsidies to companies that produce more than they expected to when they accepted Resolution #46 – as is the case with YPF – will be limited only to the nominated volumes, and not to any additional volumes. The difference, YPF said, could amount in its case to as much as $60mn.
“We will follow the evolution of the local natural gas market and evaluate the continuance of our investments without the subsidy,” YPF said in a statement to the commission.