The Argentine oil company Petrolera Aconcagua Energia SA plans to join the country’s stock exchange to raise funds for expansion as President Javier Milei’s reforms begin to attract capital to Argentine markets, the Buenos Aires Times newspaper reported. Last month, Aconcagua revealed it was bidding for aging oil fields put up for sale by the state giant YPF SA, the objective being to increase its current production by 13,500 barrels of oil equivalent per day. It is not yet clear whether Petrolera’s exploration and production unit will be listed on the stock exchange alone or whether the entire Aconcagua Energía group will be involved in the upcoming IPO.
There are growing signs that Argentina’s credit and stock markets are starting to open as libertarian President Milei moves to deregulate the economy heavily controlled the country during his first year in power. Aconcagua is not the only one wanting to go public. Last year, the company listed in New York Corporación America Airports SA (NYSE:CAAP) has filed a prospectus allowing it to sell up to $250 million of new shares in one or more offerings. CAAP’s stock price has increased 66% over the past year, valuing the company at $2.9 billion.
Shake up the system
Four years ago, Javier Milei made his debut in politics with the mission of “shaking up” the system. However, few predicted he would have the opportunity to lead this shake-up from the nation’s highest office. Yet that’s exactly what the economist and former TV commentator is doing now. Last December, Milei sent a sweeping reform bill containing more than 300 articles to Congress, seeking to implement shock economic policies such as lifting controls imports, drastic budget cuts and a devaluation of the peso by more than 50%.
As might be expected with such an ambitious reform project, the bill had mixed success, with the Argentine Chamber of Deputies giving it a mixed blessing. in February before the Senate rejected it the following month, with Milei describing the vote in a tweet as “the political caste against the Argentine people.” The executive order, however, has not yet been repealed because it must be rejected by both the upper and lower houses of Congress for this to happen.
It remains to be seen which parts of the law will be approved or rejected by the Argentine Congress. However, the bill in its original form was expected to have far-reaching impacts on the country’s energy sector. At a time when a wave of nationalization is sweeping Latin America, Milei has taken the opposite view by proposing the privatization of 41 state-owned companies, including the national oil company YPF SA, the state-owned oil company. nuclear energy Nucleoeléctrica Argentina, and the integrating player in the energy sector EnergÃa Argentina.
Milei also seeks to liberalize crude oil exports and leave local fuel prices at the mercy of market forces. His bill contains liberal provisions aimed at replacing old rules dating from the 1960s which favored the supply of affordable fuel for the average citizen. These rules allow the government to intervene directly in setting oil and gasoline prices, and also give refiners the right to first reject cargoes intended for export. However, these rules are increasingly criticized for curbing exploitation of the country’s vast shale deposit known as Vaca Muerta.
“Energy prices will be aligned with international values. The most radical change is the elimination of the obligation to satisfy the needs of the local market – this is a historic break with a century of Argentine tradition,” Juan Jose Carbajales, an energy consultant and former oil and gas undersecretary, wrote in a report.
Gasoline prices in Argentina have exploded since Milei’s election as president in November, currently reaching $3.68 per gallon compared to $2.62 in September 2023.
Source: Trading Economics
However, Milei’s energy reforms are seen as a big victory for YPF SA as well as dozens of Vaca Muerta’s oil and gas companies such as Chevron Corp. (NYSE:CVX), Shell Plc (NYSE:SHEL) and Vista Energy (NYSE:VIST) whose shale investments have been limited by low oil prices and protectionist policies that primarily favor domestic energy companies. Last year, Bloomberg reported that Exxon Mobil Inc. (NYSE: oil equivalent per day. The company confirmed in February that it was still looking to sell assets in the Shale Patch worth $1 billion (838.97 billion pesos) although no deadline for a decision has been made. However, the report states that Exxon has no plans to sell its three offshore exploration blocks in Argentina.
Located in the oil-rich province of Neuquén, Vaca Muerta is a massive shale deposit estimated to hold 16 billion barrels of oil and 308 trillion cubic feet of natural gas in natural resources. recoverable, making it the second largest shale gas deposit in the world. Indeed, Vaca Muerta is similar to the prolific Eagle Ford shale deposit in the United States, but larger, as its dry gas play has proven commercially viable.
By Alex Kimani for Oilprice.com
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