Argentina’s state-run energy firm YPF will tap global markets for a $750 million bond on Wednesday, the government said, the company’s first international debt sale since the South American country tipped into default in July.
Argentina needs to ramp up production from its vast but barely tapped Vaca Muerta shale oil and gas resource in order to reverse a gaping energy sector trade deficit that is pressuring low foreign reserves, Reuters reported. Cabinet Chief Jorge Capitanich said during his daily news conference that the bond sale “was aimed at boosting investment volumes in the context of becoming energy independent.” The bond auction, with Citigroup, JPMorgan Chase & Co and Banco Itau Argentina acting as lead mandate banks, begins at 1000 local time (1300 GMT) and closes at 1530 (1830 GMT), YPF said in a statement. The security’s listing is in Luxembourg and Buenos Aires.
Argentina has the world’s second largest shale gas resources and fourth largest shale oil resources but officials say financing is beyond the reach of state-controlled energy firm YPF and regional governments.
Chevron Corp, Petronas, Royal Dutch Shell and Total have dipped their toes in but their initial investments fall short of putting Argentina on the path to energy independence. Chinese energy giant Sinopec signed a preliminary agreement on Jan. 28 to develop projects in Vaca Muerta.
Last year, the Argentina’s oil and natural gas imports exceeded its energy sector exports by more than $6 billion.
On Wednesday, a government stimulus program to increase production and bolster exports kicked in, with producers set to receive a maximum $3 per barrel subsidy when their quarterly output exceeds a government-set base level.
