YPF unveils plans to export 100,000b/d of oil to Chile by end-2023

Argentine oil and gas giant YPF is moving ahead with plans to revive oil exports to neighboring Chile much more rapidly than outlined by authorities in meetings that took place last month.

The national oil company (NOC) firm said in its latest quarterly conference call that plans to expand its infrastructure capacity were advanced, and it had already purchased the 150km of pipes needed to access the already existing Estenssoro-Pedrals trans-Andean pipeline (known as OTA in Spanish), which started operating in 1996.

According to YPF, it will be ready to send some 35,000b/d of oil in late 2022 or early 2023 thanks to works being conducted on both sides of the border, with Chilean NOC Enap preparing its facilities to receive and process the deliveries. This would make up about 30% of OTA's total capacity.

However, unlocking its full potential requires a connection between the heart of the Vaca Muerta unconventional formation in the south of Neuquén province, where most of YPF's oil output is located, to the northern Neuquén town of Puesto Hernández, where OTA starts. This will require a 150km extension the company aims to have ready by the end of next year.

Having this new section in operation would allow YPF to export over 100,000b/d of oil directly to central-southern Chile, the firm said.

Last month, Chilean and Argentine energy authorities said they had plans to start using the OTA again after over a decade of neglect. However, the authorities spoke of deliveries of only 17,000b/d and warned that the project had technical hurdles to clear first. 

The 425km Estenssoro-Pedrals pipeline was built by Enap, YPF and Unocal Argentina starting in 1994. It connects northern Neuquén, which at the time was a conventional oil production hub, with Enap's refinery in Biobío region, which supplies most of southern Chile. The refinery has recently faced difficulties due to a series of strikes by contractors.

The pipeline had deliveries suspended by YPF in October 2000 because its use had declined from 115,000b/d at its peak to around 35,000b/d, making its operation economically unviable.

Argentina's oil production has been increasing steadily over the past year after it fell during the COVID-19 pandemic. In March, the country pumped an average 570,000b/d, its highest monthly output since 2011. The Vaca Muerta formation produced 222,000b/d, or 39% of the total.

In its 1Q22 results presentation, YPF reported it had seen a "remarkable" expansion of shale production, leading its overall oil and gas output to increase 16% over the past six months, with shale and tight gas making up 48% of its operations. In particular, shale gas production grew 140% over the past year, while shale oil output rose 52% in the same period.

The company posted a US$248mn profit in 1Q22, up 0.6% from the previous quarter, while revenues reached US$3.63bn, a 37.3% year-on-year hike. The company invested US$748mn in the period, 17.7% less than the previous quarter, but 53.5% more than in 1Q21.