Argentina to Spend Billions on Production, Infrastructure

BUENOS AIRES (Reuters) - Argentina's state oil company, YPF, will significantly boost oil and gas production and infrastructure expansion, investing between $4 billion and $5 billion per year through 2022, Chief Executive Daniel Gonzalez told Reuters on Friday.

It plans to raise production by between 5% and 7% per year, primarily in the Vaca Muerta shale, and invest $3.6 billion on infrastructure in the Vaca Muerta over the next five years, Gonzalez said.  He added that the company is looking to accelerate shale drilling to complete 1,700 wells by 2023.

"Crude oil is going to grow, I would say twice as fast as natural gas for us in the next five years," Gonzalez said. "Having said that, crude oil production will be seven times what it is today and shale gas will be four times what it is today in five years. So there will be a significant growth in unconventional (shale) production," he said.

The Vaca Muerta formation is one of the world's largest reserves of shale oil and gas, and Argentina has offered a series of financial incentives to help spur development since President Mauricio Macri took office in December 2015.  Its initiatives included a labor agreement designed to attract drillers, construction companies and mid-stream service providers to the region.

YPF is the leading investor in the Vaca Muerta, but its strategy calls for a broader expansion. This week, it began exporting gas to Chile for the first time in 12 years.  YPF said it will increase offshore exploration in Argentina's Gulf of San Jorge, on the southern Atlantic coast. The company also plans to double its electricity generation capacity and fuel 20 percent of that output with renewable sources by 2023.

"All of this growth can be financed organically by the company, by markets and our cash generation," Gonzalez said.