BMI Argentina Oil and Gas Report Q3 2013

Q3 2013
www.businessmonitor.com
ARGENTINA
OIL & GAS REPORT
INCLUDES 10-YEAR FORECASTS TO 2022
ISSN 1748-3808
Published by:Business Monitor International
Argentina Oil & Gas Report Q3 2013

INCLUDES 10-YEAR FORECASTS TO 2022
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International Copy deadline: May 2013
Business Monitor International Senator House 85 Queen Victoria Street London EC4V 4AB United Kingdom Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com
2013 Business Monitor International All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher.
DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.
CONTENTS
BMI Industry View ............................................................................................................... 7 SWOT .................................................................................................................................... 9 Industry Forecast .............................................................................................................. 11
Oil And Gas Reserves ............................................................................................................................. 11
Table: Argentina Proven Oil & Gas Reserves and Total Petroleum Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Table: Argentina Proven Oil & Gas Reserves And Total Petroleum Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Oil Supply And Demand .......................................................................................................................... 13

Table: Argentina Oil Production, Consumption And Net Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Table: Argentina Oil Production, Consumption And Net Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Gas Supply And Demand ......................................................................................................................... 16

Table: Argentina Gas Production, Consumption And Net Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table: Argentina Gas Production, Consumption And Net Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Refining And Oil Products Trade .............................................................................................................. 20

Table: Argentina Refining - Production And Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Table: Argentina Refining - Production And Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Revenues/Import Costs ............................................................................................................................ 21
Industry Risk Reward Ratings .......................................................................................... 22

Latin America - Risk/Reward Ratings .......................................................................................................... 22
Table: Latin America Oil & Gas Risk/Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Upstream: Production Growth Forecasts Reinforce Regional Polarization ....................................................... 25

Table: Latin America Upstream Risk/Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Downstream: Medium-Term Outlook Reinforces Current Dynamics ................................................................ 27

Table: Latin America Downstream Risk/Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Argentina - Risk/Reward Ratings ................................................................................................................ 28 Argentina Upstream Ratings .................................................................................................................... 28 Argentina Downstream Ratings ................................................................................................................ 29
Market Overview ............................................................................................................... 30

Argentina Energy Market Overview ............................................................................................................ 30 Overview/State Role ............................................................................................................................... 30 Licensing And Regulation ........................................................................................................................ 31 Government Policy ................................................................................................................................. Licensing Rounds ................................................................................................................................... International Energy Relations ................................................................................................................. Argentina - Major Upstream Projects ........................................................................................................ 31 32 33 35
Table: Argentina - Upstream Projects Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Oil And Gas Infrastructure ........................................................................................................................ 35 Oil Refineries ........................................................................................................................................ 35

Table: Refineries In Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Business Monitor International
Page 4
Argentina Oil & Gas Report Q3 2013 Service Stations ..................................................................................................................................... Oil Terminals/Ports ................................................................................................................................ Oil Pipelines ......................................................................................................................................... LNG Terminals ...................................................................................................................................... Gas Storage .......................................................................................................................................... Gas Pipelines ........................................................................................................................................ 37 37 37 38 38 39
Competitive Landscape .................................................................................................... 41

Table: Key Players - Argentine Oil And Gas Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Table: Key Upstream Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Table: Key Downstream Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Company Profile ................................................................................................................ 44

YPF ...................................................................................................................................................... Petrobras ............................................................................................................................................... Chevron ................................................................................................................................................. Total ..................................................................................................................................................... ExxonMobil ............................................................................................................................................ Royal Dutch Shell .................................................................................................................................... Apache Energy ........................................................................................................................................ Other Companies - Summary ..................................................................................................................... 44 48 51 53 56 58 60 63
Regional Overview ............................................................................................................ 66

Latin America Overview ........................................................................................................................... 66
Global Industry Overview .................................................................................................. 73

Global Energy Market Overview ................................................................................................................ 73
Table: BMI's Oil Price Forecasts & Bloomberg Analyst Consensus, Average Price (US$/bbl) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Table: Global Oil Demand Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Industry Trend Analysis ............................................................................................................................ 83 Growing Implementation Base .................................................................................................................. 84 Developed Drive .................................................................................................................................... 86
Appendix ............................................................................................................................ 87
Latin America - Regional Appendix ............................................................................................................. 87
Table: Oil Consumption - Historical Data & Forecasts, 2010-2017 ('000b/d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Table: Oil Consumption - Long-Term Forecasts, 2014-2021 ('000b/d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Table: Oil Production - Historical Data & Forecasts, 2010-2017 ('000b/d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Table: Oil Production - Long-Term Forecasts, 2014-2021 ('000b/d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Table: Refining Capacity - Historical Data & Forecasts, 2010-2017 ('000b/d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Table: Refining Capacity - Long-Term Forecasts, 2014-2021 ('000b/d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Table: Gas Consumption - Historical Data & Forecasts, 2010-2017 (bcm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Table: Gas Consumption - Long-Term Forecasts, 2014-2021 (bcm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Table: Gas Production - Historical Data & Forecasts, 2010-2017 (bcm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Table: Gas Production - Long-Term Forecasts, 2014-2021 (bcm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Table: LNG Exports - Historical Data & Forecasts, 2010-2017 (bcm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Table: LNG Exports - Long-Term Forecasts, 2014-2021 (bcm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Page 5
Glossary ............................................................................................................................. 95
Table: Glossary Of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Methodology ...................................................................................................................... 97
Oil & Gas Risk/Reward Ratings Methodology ............................................................................................. 97 Ratings Overview ................................................................................................................................... 97
Table: BMI's Oil & Gas Risk Reward Ratings - Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Indicators ............................................................................................................................................. 98
Table: BMI's Oil & Gas Business Environment Upstream Ratings - Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Oil & Gas Forecasts Methodology .......................................................................................................... 100 Energy Industry ................................................................................................................................... 100 Cross checks ....................................................................................................................................... 101 Sources .............................................................................................................................................. 101
Page 6
BMI Industry View

BMI View: Argentina's technically recoverable shale resources are the third largest in the world, behind only China and the US. Yet the Argentina's business environment has turned increasingly negative in recent years, and this has only been further exacerbated by the expropriation of YPF from Repsol in early 2012. There appears, however, to be a small but growing cadre of international and national oil companies seeking to gain first-mover advantage by tapping potentially game-changing shale resources in the Vaca Muerta formation - despite Argentina's risky business environment. If the country is able to make the necessary investments, its shale potential could provide the country with an opportunity to become a regional, and potentially global, gas powerhouse. Nevertheless, we continue to highlight the challenges to operating there, and expect a difficult progression to large-scale unconventional natural gas production. Indeed, we retain our view that rising gas production will fail to keep pace with rising consumption, leading to an increasingly costly import burden over our forecast period.
The main trends and developments we highlight in the Argentine oil and gas sector are:
There appears to be an uptick in momentum with regards to investment in Argentina's shale potential, with several companies calculating that the benefit of having first-mover advantage in Vaca Muerta will outweigh the risks associated with investment in the sector. Should YPF prove successful in unlocking some of its massive shale potential through participation with foreign partners, it could provide the country with an opportunity to stave off or possibly even reverse a decline in gas production - giving the country net importer status over the next decade. Although we are holding on to our forecasts, which highlight the growing gas import burden, recent developments are generating significant upside risk to them. Indeed, in addition to Uruguayan Ancap's negotiations in early 2013, we have also provided extensive analysis of the deal which was signed by Chevron and YPF in late 2012, as well as that of Argentina's Bridas Corporation (which is 50% owned by China's CNOOC). In April 2013 Dow Chemical signed an MoU with YPF to develop the El Orejano block. For its part, Chevron is in the midst of a pilot project with YPF, which will involve the drilling of 100 wells in 2013 at a shared cost of US$1bn, although an ongoing dispute with Ecuador is being played out in Argentine courts, resulting in a freezing of its assets. YPF and Chevron both acknowledged the negative effects this was having on their joint shale development plans. YPF's investment plan envisages US$7bn in capital expenditure (capex) each year to 2017, focusing on the unconventional plays at Vaca Muerta and marginal fields. The aim is to increase production to 219.2 barrels of oil equivalent (boe) by 2017, a rise of 37% on current production levels. YPF aims to increase the number of new wells to 50 per year, in comparison to 19 wells per year between 2007 and 2011. Prior to its expropriation, Repsol-YPF had estimated that it would invest US$25bn per year to double the country's current oil and gas production. Conventional oil volumes will continue to come under pressure, though the plan to increase production from marginal fields could provide some respite if implemented as envisaged by YPF. Our current estimates assume oil output declining slowly but steadily in the coming years. By 2017, we expect Argentina to be pumping an average 715,000 barrels per day (b/d). We reiterate that we have not yet begun to factor in the country's massive shale potential, which therefore provides considerable upside risk to this forecast.
Page 7
One upside risk to our oil production forecast comes from recent activities in the country by President Energy, which is looking to revive production at its Puesto Guardian concession in north-west Argentina using fracking techniques. A return to more significant production volumes, which peaked at 9,000b/d in the 1980s, would pose a modest upside risk to our oil production forecast. However, we still expect the current decline in oil production to continue over the next decade, albeit at a slower pace than in recent years. The Argentine government has continued to reform its fiscal regime - with a cut in the export taxes levied on domestically produced oil - in an attempt to increase its attractiveness to foreign investment. With this change, exporters will now realise US$70 per barrel (bbl) for oil sold abroad, rather than US$42/bbl as was previously the case. The change follows a November revision of wellhead natural gas prices, which are to rise from US$5per mn British Thermal Units (mnBTU) to US$7.50/mnBTU in a bid to further incentivise production. Artificially low domestic prices for fuels continue to insulate demand, with our forecast for annual average growth in oil consumption of 2.1 % through to 2017, reaching 777,188b/d. Exacerbating this dynamic in the short term is the freeze of consumer energy prices announced by the government in April 2013. The move is an effort to mitigate inflationary pressures in advance of the October 2013 congressional elections. The trend of importing more and more refined fuels while exporting less and less crude oil will continue, pushing the cost of imports higher. By 2018 we see net oil imports of 13,360b/d and rising thereafter, ending Argentina's position as a net oil exporter. Our forecasts suggest that natural gas production will reach 40.5bn cubic metres (bcm) by 2017, although, again, we are not factoring in any shale gas production at this preliminary stage. Under the current forecast scenario, imports of natural gas are expected to exceed 17bcm by 2017, up from 7.4bcm in 2011.
At the time of writing we assumed an OPEC basket oil price for 2013 of US$108.40/bbl, falling to US $104.00/bbl in 2014.
Page 8
SWOT
SWOT Analysis
Strengths
An audit of the Vaca Muerta formation in Argentina's Neuqun Province has led to a substantial increase in estimated reserves. The formation is now considered to hold prospective resources of 21.2bn barrels of oil equivalent (boe). According to the EIA, Argentina holds the world's third largest shale gas resources, behind China and the United States.
Oil and gas related infrastructure and services are fairly well developed. Oil production has been in decline since the late 1990s. Similarly, natural gas production is falling increasingly short of consumption, leading to an increasing import burden.
Weaknesses
Heavily subsidised natural gas prices deter investment in new projects, ensuring the country's import dependence. These prices were increased slightly at the end of 2012, however, in order to spur additional investment.
Opportunities
The country's offshore, particularly in deep waters near the Falkland Islands, remains underexplored.
Subsidy and labour reforms would likely unleash a new wave of investment in Argentina's hydrocarbons sector.
There appears to be a small but growing cadre of international and national oil companies seeking to gain first-mover advantage by tapping potentially gamechanging shale resources in the Vaca Muerta formation - despite Argentina's risky business environment.
Threats
Strikes and labour disputes are rife and often lead to slow project development and production shut downs.
As Falkland Islands oil production moves closer to reality, tensions are likely to rise with the UK.
Page 9
SWOT Analysis - Continued
Heavy-handed state intervention and re-nationalisation of YPF has created a lot of uncertainty and investor concern.
Page 10
Industry Forecast
Oil And Gas Reserves
Table: Argentina Proven Oil & Gas Reserves and Total Petroleum Data
2011 Proven Oil Reserves bbl bn Proven Oil Reserves bbl mn Proven Oil Reserves % change y-o-y Reserves to production ratio (RPR), years Natural Gas Proven Reserves, tcm Natural Gas Proven Reserves, bcm Natural Gas Proven Reserves, % change y-o-y Natural Gas Reserve to Production Ratio, years 2.5
2012e 2.5
2013f 2.5
2014f 2.5
2015f 2.5
2016f 2.5
2,504.7 2,504.7 2,500.0 2,500.0 2,500.0 2,500.0 -0.6 9.2 0.4 378.9 -4.9 9.8 0.0 9.3 0.4 378.9 0.0 10.1 -0.2 9.3 0.3 332.5 -12.2 8.6 0.0 9.3 0.3 325.8 -2.0 8.4 0.0 9.4 0.3 319.3 -2.0 8.2 0.0 9.5 0.3 312.9 -2.0 7.8
Petroleum Production, Consumption and Net Exports Total Petroleum Production, 000boe/d Total Petroleum Production, 000boe/d, % change y-o-y Total Petroleum Production, US$bn Total Petroleum Production, US$, % change y-o-y Total Petroleum Consumption, 000boe/d Total Petroleum Consumption, 000boe/d, % change y-o-y Total Petroleum Consumption, US$bn Total Petroleum Consumption, US$, % change y-o-y Total Net Petroleum Exports, 000boe/d Total Net Petroleum Exports, 000boe/d, change y-o-y Total Net Petroleum Exports, US$bn Total Net Petroleum Exports, US$, % change y-o-y Total Net Petroleum Exports, US$mn at US$50/bbl, US$bn Total Net Petroleum Exports, US$mn at US$100/bbl, US$bn 1,412.9 1,385.3 1,398.9 1,406.1 1,398.9 1,409.8 -4.6 31.4 33.1 -2.0 31.2 -0.6 1.0 31.3 0.2 0.5 30.3 -2.9 -0.5 29.4 -3.2 0.8 29.2 -0.6
1,473.1 1,527.4 1,574.5 1,623.2 1,673.6 1,729.3 7.8 51.3 50.0 -60.2 -152.2 -1.3 -136.9 -0.6 -1.2 3.7 54.1 5.6 -142.2 136.1 -4.2 215.9 -1.9 -3.8 3.1 55.0 1.6 -175.6 23.5 -5.3 27.1 -2.5 -4.9 3.1 54.5 -0.8 -217.1 23.6 -6.5 22.2 -3.1 -6.2 3.1 54.5 0.0 -274.6 26.5 -8.1 25.6 -4.0 -8.1 3.3 55.2 1.2 -319.6 16.4 -9.4 16.1 -4.8 -9.5
e/f = estimate/forecast. Source: EIA, BMI
Page 11
Table: Argentina Proven Oil & Gas Reserves And Total Petroleum Data
2017f Proven Oil Reserves bbl bn Proven Oil Reserves bbl mn Proven Oil Reserves % change y-o-y Reserves to production ratio (RPR), years Natural Gas Proven Reserves, tcm Natural Gas Proven Reserves, bcm Natural Gas Proven Reserves, % change y-o-y Natural Gas Reserve to Production Ratio, years 2.5
2018f 2.5
2019f 2.5
2020f 2.5
2021f 2.5
2022f 2.5
2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 0.0 9.6 0.3 306.7 -2.0 7.6 0.0 9.6 0.3 300.6 -2.0 7.2 0.0 9.7 0.3 294.5 -2.0 7.0 0.0 9.7 0.3 288.6 -2.0 6.7 0.0 9.8 0.3 282.9 -2.0 6.6 0.0 9.9 0.3 277.2 -2.0 6.4
Petroleum Production, Consumption and Net Exports Total Petroleum Production, 000boe/d Total Petroleum Production, 000boe/d, % change y-o-y Total Petroleum Production, US$bn Total Petroleum Production, US$, % change y-o-y Total Petroleum Consumption, 000boe/d Total Petroleum Consumption, 000boe/d, % change y-o-y Total Petroleum Consumption, US$bn Total Petroleum Consumption, US$, % change y-o-y Total Net Petroleum Exports, 000boe/d Total Net Petroleum Exports, 000boe/d, change y-o-y Total Net Petroleum Exports, US$bn Total Net Petroleum Exports, US$, % change y-o-y Total Net Petroleum Exports, US$mn at US$50/bbl, US$bn Total Net Petroleum Exports, US$mn at US$100/bbl, US$bn 1,413.5 1,426.5 1,431.0 1,444.0 1,439.9 1,435.8 0.3 28.6 -1.9 0.9 28.1 -1.8 0.3 27.7 -1.5 0.9 28.1 1.5 -0.3 28.1 -0.1 -0.3 28.1 -0.1
1,783.3 1,839.1 1,896.8 1,956.5 2,018.2 2,082.1 3.1 55.4 0.4 -369.8 15.7 -10.8 13.9 -5.6 -11.1 3.1 55.2 -0.4 -412.6 11.6 -11.7 8.8 -6.3 -12.5 3.1 55.7 0.9 -465.8 12.9 -13.0 11.1 -7.1 -14.2 3.1 57.4 3.1 -512.4 10.0 -14.4 10.6 -7.9 -15.7 3.2 59.2 3.1 -578.3 12.9 -16.3 13.2 -8.9 -17.8 3.2 61.0 3.1 -646.3 11.8 -18.2 12.0 -10.0 -19.9
f = forecast. Source: EIA, BMI
Argentina has oil reserves of 2.5bn barrels (bbl) and gas reserves of 380bn cubic metres (bcm) of gas (according to the EIA). The EIA has stated that Argentina has the world's third largest shale gas resources in the world, behind only China and the United States. The country is only in the very early stages of exploration into its shale potential, however, and as such we have held on to our forecasts for now while acknowledging the potential for substantial revisions if and when reserves begin being booked.
Page 12
Oil Supply And Demand

Table: Argentina Oil Production, Consumption And Net Exports
2011 2012e 2013f 2014f 2015f 2016f Total Oil Production, 000b/d Total Oil Production, mn bbl/year Total Oil Production, % change y-o-y Total Oil Production, US$bn Total Oil Production, US$bn, % change y-o-y Total Oil Production, US$bn at US$50/bbl Total Oil Production, US$bn at US$100/bbl Total Oil Production, US$bn at US$150/bbl Total Oil Consumption, 000b/d Total Oil Consumption, % change y-o-y Total Net Oil Exports (crude and products), 000b/d Total Net Oil Exports (crude and products), % change y-o-y Total Net Oil Exports (crude and products), US$bn Total Net Oil Exports (crude and products), US$bn, % change y-o-y Total Net Oil Exports (crude and products), US$bn at US$50/bbl Total Net Oil Exports (crude and products), US$bn at US$100/bbl Total Net Oil Exports (crude and products), US$bn at US$150/bbl 744.8 271.8 -5.8 10.7 30.9 13.6 27.2 40.8 678.0 9.3 66.8 -60.8 2.6 -45.5 1.2 2.4 3.7 739.0 269.7 -0.8 10.8 1.1 13.5 27.0 40.5 700.5 3.3 38.5 -42.3 1.5 -41.2 0.7 1.4 2.1 735.5 268.4 -0.5 10.6 -1.8 13.4 26.8 40.3 714.5 2.0 21.0 -45.6 0.8 -46.4 0.4 0.8 1.1 734.0 267.9 -0.2 10.2 -3.9 13.4 26.8 40.2 728.8 2.0 5.2 726.8 265.3 -1.0 9.8 -3.8 13.3 26.5 39.8 743.4 2.0 -16.5 720.5 263.0 -0.9 9.5 -2.8 13.1 26.3 39.4 761.9 2.5 -41.5 151.2 -1.5 146.2 -0.8 -1.5 -2.3
-75.1 -416.1 0.2 -0.6
-76.0 -407.0 0.1 0.2 0.3 -0.3 -0.6 -0.9
Page 13
Table: Argentina Oil Production, Consumption And Net Exports
2017f Total Oil Production, 000b/d Total Oil Production, mn bbl/year Total Oil Production, % change y-o-y Total Oil Production, US$bn Total Oil Production, US$bn, % change y-o-y Total Oil Production, US$bn at US$50/bbl Total Oil Production, US$bn at US$100/bbl Total Oil Production, US$bn at US$150/bbl Total Oil Consumption, 000b/d Total Oil Consumption, % change y-o-y Total Net Oil Exports (crude and products), 000b/d Total Net Oil Exports (crude and products), % change y-o-y Total Net Oil Exports (crude and products), US$bn Total Net Oil Exports (crude and products), US$bn, % change y-o-y Total Net Oil Exports (crude and products), US$bn at US$50/bbl Total Net Oil Exports (crude and products), US$bn at US$100/bbl Total Net Oil Exports (crude and products), US$bn at US$150/bbl 715.5 261.2 -0.7 9.2 -3.2 13.1 26.1 39.2 777.2 2.0 -61.7 48.6 -2.2 44.8 -1.1 -2.3 -3.4
2018f 711.3 259.6 -0.6 8.8 -3.8 13.0 26.0 38.9 792.7 2.0
2019f 707.2 258.1 -0.6 8.6 -2.7 12.9 25.8 38.7 808.6 2.0
2020f 703.0 256.6 -0.6 8.6 -0.5 12.8 25.7 38.5 824.8 2.0
2021f 698.9 255.1 -0.6 8.5 -0.5 12.8 25.5 38.3 841.3 2.0
2022f 694.8 253.6 -0.6 8.5 -0.5 12.7 25.4 38.0 858.1 2.0
-81.4 -101.4 -121.7 -142.3 -163.3 32.0 -2.8 27.7 -1.5 -3.0 -4.5 24.6 -3.4 22.0 -1.9 -3.7 -5.6 20.0 -4.1 20.1 -2.2 -4.4 -6.7 16.9 -4.8 17.0 -2.6 -5.2 -7.8 14.7 -5.5 14.8 -3.0 -6.0 -8.9
Page 14
Oil production levels rose quickly during the 1990s, from 525,000 barrels per day (b/d) to more than 840,000b/d by the end of the decade. Since then, a domestic financial crisis has led to reduced investment and volume stagnation, with 722,160b/d produced in 2012, representing a 0.79% fall from
750 1,000
Argentine Oil Production, Consumption & Net Exports

2002-2017, '000b/d
500
2011 production levels.

500
250
Our near-term outlook sees volumes increasing a further 0.50% to 718,550b/d in 2013. The downtrend will remain in place, and production will reach 698,630b/d by 2017. The country's oil production downtrend will remain in place throughout the second half of our forecast period as well, with 677,920b/d expected in 2022. We again reiterate that this forecast does not take into account potential shale liquids production, as exploration is currently nascent, highly prospective, and will likely be gasdirected.
250
0 2014 2015 2016 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2017
-250
Total oil production, 000b/d (LHS) Total oil consumption, 000b/d (LHS) Total net oil exports (crude and products), 000b/d (RHS)
Despite our forecasts, YPF's new investment plan is focusing on additional production volumes, and calls for US$7bn in capex each year through to 2017. The investment will focus on the unconventional plays at Vaca Muerta and marginal fields. The aim is to increase production to 219.2 barrels of oil equivalent (boe) by 2017, up 37% on current production levels, consisting of a ten- and twenty-fold increase in oil and gas production respectively. Previously, Repsol-YPF had estimated that it would take US$25bn per year to double the country's current oil and gas production. We remain bearish on YPF's ability to accomplish a large-scale turnaround in production, as its current agreements with foreign partners are tentative and/or pilot projects, in addition to the large financial burden on the company in an environment where raising money in international markets is exceeding difficult due to Argentina's poor business environment.
On the demand side, artificially low domestic prices for fuels insulate demand, in spite of the weakening macroeconomic environment, including the most recent fuel price freeze which is focused on controlling inflation. We forecast annual average growth in oil consumption of approximately 2.0% per annum through 2017, reaching 777,188b/d.
Page 15
Shale Oil
In late 2012, YPF and Chevron signed an agreement for a pilot project to develop the country's vast shale reserves in the Vaca Muerta formation. The plan will involve the drilling of 100 wells in 2013 at a shared cost of US$1bn. The deal signing represents the first agreement signed between YPF and an international oil company (IOC) since the Argentine government expropriated YPF from Repsol. Since then, there appears to be an uptick in momentum with regards to investment in Argentina's shale potential, with several companies calculating that the benefit of having first-mover advantage in Vaca Muerta will outweigh the risks associated with investment in the sector. Additional companies to make agreements with or express interest into entering Argentina in addition to Chevron are Bridas Corporation, Urugay's state-owned Ancap, ExxonMobil, and others. Importantly, while there is some upside for liquids production due to shale development, it is likely that the majority of this production will be gas directed, at least in the near term.
Gas Supply And Demand

Table: Argentina Gas Production, Consumption And Net Exports
2011 Dry Natural Gas Production, bcm Dry Natural Gas Production, % change y-o-y Dry Natural Gas Production, US$mn Dry Natural Gas Production, US$bn, % change y-o-y Dry Natural Gas Production, US$bn at US$4/mn btu Dry Natural Gas Production, US$bn at US$12/mn btu Dry Natural Gas Production, US$bn at US$18/mn btu Dry Natural Gas Production, % of Domestic Consumption Dry Natural Gas Consumption, bcm Dry Natural Gas Consumption, % change y-o-y Dry Natural Gas Consumption, US$bn Dry Natural Gas Consumption, US$bn % change y-o-y Dry Natural Gas Net Exports, bcm Dry Natural Gas Net Exports, % change y-o-y Dry Natural Gas Net Exports, US$bn Dry Natural Gas Net Exports, US$bn % change y-o-y Dry Natural Gas Net Exports, at US$50/bbl US$bn Dry Natural Gas Net Exports, at US$100/bbl US$bn 46.1 6.6 24.7 48.1 -7.4 131.0 -3.9 221.0 -1.8 -3.7 38.8 -3.3 20.7 34.3 5.5 16.6 24.9
2012e 37.5 -3.3 20.4 -1.5 5.4 16.1 24.1
2013f 38.5 2.7 20.7 1.3 5.5 16.5 24.8
2014f 39.0 1.3 20.2 -2.5 5.6 16.7 25.1
2015f 39.0 0.0 19.6 -2.9 5.6 16.7 25.1
2016f 40.0 2.6 19.7 0.5 5.7 17.1 25.7
48.0 4.0 26.1 5.9 -10.5 42.3 -5.7 44.9 -2.6 -5.2
49.9 4.0 26.8 2.6 -11.4 8.8 -6.1 7.3 -2.8 -5.7
51.9 4.0 26.9 0.1 -12.9 13.1 -6.7 8.9 -3.2 -6.4
54.0 4.0 27.1 1.0 -15.0 16.1 -7.5 12.7 -3.7 -7.5
56.1 4.0 27.6 1.9 -16.1 7.7 -7.9 5.6 -4.0 -8.0
Page 16
Argentina Gas Production, Consumption And Net Exports - Continued
2011 o/w Pipeline Gas Net Exports, bcm o/w Pipeline Gas Net Exports, % change y-o-y o/w Pipeline Gas Net Exports, % of total o/w Pipeline Gas Net Exports, US$bn o/w Pipeline Gas Net Exports, US$bn % change y-o-y o/w LNG Net Exports, bcm o/w LNG Net Exports, % change y-o-y o/w LNG Net Exports, % of Total Gas Exports o/w LNG Net Exports, US$bn o/w LNG Net Exports, US$bn % change y-o-y -4.6 236.0 62.0 -2.4 366.9 -2.8 53.0 38.0 -1.6 112.6
2012e -7.5 63.8 71.4 -4.1 66.8 -3.0 7.1 28.6 -1.7 9.1
2013f -6.4 -14.4 56.2 -3.4 -15.6 -5.0 66.7 43.8 -2.9 64.4
2014f -6.9 7.7 53.5 -3.6 3.8 -6.0 20.0 46.5 -3.3 15.6
2015f -7.0 1.1 46.6 -3.5 -1.8 -8.0 33.3 53.4 -4.3 29.5
2016f -8.1 16.6 50.4 -4.0 14.3 -8.0 0.0 49.6 -4.2 -2.0
Table: Argentina Gas Production, Consumption And Net Exports
2017f Dry Natural Gas Production, bcm Dry Natural Gas Production, % change y-o-y Dry Natural Gas Production, US$mn Dry Natural Gas Production, US$bn, % change y-o-y Dry Natural Gas Production, US$bn at US$4/mn btu Dry Natural Gas Production, US$bn at US$12/mn btu Dry Natural Gas Production, US$bn at US$18/mn btu Dry Natural Gas Production, % of Domestic Consumption Dry Natural Gas Consumption, bcm Dry Natural Gas Consumption, % change y-o-y Dry Natural Gas Consumption, US$bn Dry Natural Gas Consumption, US$bn % change y-o-y Dry Natural Gas Net Exports, bcm Dry Natural Gas Net Exports, % change y-o-y Dry Natural Gas Net Exports, US$bn Dry Natural Gas Net Exports, US$bn % change y-o-y Dry Natural Gas Net Exports, at US$50/bbl US$bn Dry Natural Gas Net Exports, at US$100/bbl US$bn 58.4 4.0 28.0 1.4 -17.9 10.8 -8.6 8.0 -4.4 -8.9 40.5 1.3 19.4 -1.3 5.8 17.4 26.0
2018f 41.5 2.5 19.3 -0.9 5.9 17.8 26.7
2019f 42.0 1.2 19.1 -0.9 6.0 18.0 27.0
2020f 43.0 2.4 19.6 2.4 6.1 18.4 27.6
2021f 43.0 0.0 19.6 0.1 6.1 18.4 27.6
2022f 43.0 0.0 19.6 0.1 6.1 18.4 27.6
60.7 4.0 28.2 0.6 -19.2 7.5 -8.9 4.0 -4.8 -9.6
63.1 4.0 28.7 1.8 -21.1 10.0 -9.6 7.7 -5.3 -10.5
65.7 4.0 29.9 4.1 -22.7 7.2 -10.3 7.3 -5.6 -11.3
68.3 4.0 31.1 4.1 -25.3 11.6 -11.5 11.6 -6.3 -12.6
71.0 4.0 32.3 4.1 -28.0 10.8 -12.8 10.9 -7.0 -13.9
Page 17
Argentina Gas Production, Consumption And Net Exports - Continued
2017f o/w Pipeline Gas Net Exports, bcm o/w Pipeline Gas Net Exports, % change y-o-y o/w Pipeline Gas Net Exports, % of total o/w Pipeline Gas Net Exports, US$bn o/w Pipeline Gas Net Exports, US$bn % change y-o-y o/w LNG Net Exports, bcm o/w LNG Net Exports, % change y-o-y o/w LNG Net Exports, % of Total Gas Exports o/w LNG Net Exports, US$bn o/w LNG Net Exports, US$bn % change y-o-y -9.9 21.5 55.3 -4.7 18.4 -8.0 0.0 44.7 -4.1 -2.5
2018f -10.2 3.4 53.2 -4.7 0.0 -9.0 12.5 46.8 -4.5 8.8
2019f -12.1 18.9 57.4 -5.5 16.4 -9.0 0.0 42.6 -4.4 -2.1
2020f -11.7 -3.9 51.5 -5.3 -3.9 -11.0 22.2 48.5 -5.3 22.3
2021f -14.3 22.5 56.5 -6.5 22.6 -11.0 0.0 43.5 -5.3 0.1
2022f -17.0 19.1 60.8 -7.8 19.2 -11.0 0.0 39.2 -5.3 0.1
Natural gas consumption had been rising at an annual rate of 5% before the global financial crisis, but demand has stalled during the downturn. We now see demand picking up in line with economic recovery. Indeed, consumption of an estimated 48.0bcm in 2012 will rise to 58.4bcm by 2017, leading to a gas import burden of over 15bcm. Ceteris paribus, that trend will remain in place, with the import burden rising to over 25bcm by 2022.
25 50 0 75
Argentine Natural Gas Production, Consumption, & Net Exports

2002-2017, '000b/d
The Argentine government is hoping a new generation of fields in the southern region of Tierra del Fuego will help to offset falling gas output from the mature basins in the west and north west of the country. Argentina similarly has high hopes for offshore acreage, although deepwater exploration has so far failed to take off, as investors have expressed uncertainty over the regulatory
e/f=estimate/forecast, Source: EIA, BMI
environment and the region's resource potential. In addition, tensions over the Falkland Islands and offshore development remains top of mind for those interested in the islands potential.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 16 17 18 19 20 Dry natural gas production, bcm (LHS) Dry natural gas consumption, bcm (LHS) Dry natural gas net exports, bcm (RHS)
-20
Page 18
Our forecast suggests that natural gas production will reach 40.5bcm by 2017, although we again reiterate that we are not factoring in any production from shale gas at this stage.
Shale Gas
To be sure, there is the potential for our natural gas forecasts to change as investment into the country's shale potential accelerates. With the world's third largest technically recoverable shale gas resources (according to the EIA), there is growing interest by IOCs and national oil companies (NOCs) alike into its development.
Depending on the relative success of the development of Vaca Muerta, there is the potential to either stave off, or possibly even reverse, Argentina's decline in production and likely move to net importer status over the next decade. Looking to the long term, we have previously discussed that Argentina's vast reserves could act as a critical game-changer, altering its role in the region and beyond.
LNG
Argentina has rapidly expanded its LNG import capacity since the first import terminal came onstream in 2008. This is a trend we expect to continue as the country becomes increasingly reliant on gas imports and looks to lessen its dependence on Bolivian pipeline imports.
Argentina has a theoretical LNG import capacity of just over 8bcm, delivered via two floating regasification units. The first floating liquefied natural gas (FLNG) terminal, the 3bcm Baha Blanca GasPort (BBGP), was brought onstream in 2008. That was followed by a second terminal, the 5.2bcm Escobar FLNG terminal, which started operations in May 2011. Southern Cone LNG, the country's third FLNG terminal, is expected to come onstream in 2014.
Page 19
Refining And Oil Products Trade
Table: Argentina Refining - Production And Consumption
2011 Crude Oil Refining Capacity, 000b/d Crude Oil Refining Capacity, % change y-o-y Crude Oil Refining Capacity, Utilisation, % Refined Petroleum Products Production, 000b/d Refined Petroleum Products Production, % change y-o-y Refined Products Production (inc ethanol and non-conventional), 000b/d Refined Products Production (inc ethanol and non-conventional), % change y-o-y Refined Products Consumption (inc ethanol and nonconventional), 000b/d Refined Products Consumption (inc ethanol and nonconventional), % change y-o-y 631.2 0.0 33.2 209.5 0.0 232.5 0.0 709.5 12.2
2012e 631.2 0.0 33.2 209.5 0.0 233.5 0.4 734.2 3.5
2013f 631.2 0.0 33.2 209.5 0.0 234.5 0.4 748.9 2.0
2014f 631.2 0.0 33.2 209.5 0.0 235.5 0.4 765.3 2.2
2015f 631.2 0.0 33.2 209.5 0.0 236.5 0.4 783.1 2.3
2016f 631.2 0.0 33.2 209.5 0.0 237.5 0.4 805.7 2.9
Table: Argentina Refining - Production And Consumption
2017f Crude Oil Refining Capacity, 000b/d Crude Oil Refining Capacity, % change y-o-y Crude Oil Refining Capacity, Utilisation, % Refined Petroleum Products Production, 000b/d Refined Petroleum Products Production, % change y-o-y Refined Products Production (inc ethanol and non-conventional), 000b/d Refined Products Production (inc ethanol and non-conventional), % change y-o-y Refined Products Consumption (inc ethanol and nonconventional), 000b/d Refined Products Consumption (inc ethanol and nonconventional), % change y-o-y 631.2 0.0 33.2 209.5 0.0 238.5 0.4 825.7 2.5
2018f 631.2 0.0 33.2 209.5 0.0 239.5 0.4 846.0 2.5
2019f 631.2 0.0 33.2 209.5 0.0 240.5 0.4 866.3 2.4
2020f 631.2 0.0 33.2 209.5 0.0 241.5 0.4 887.3 2.4
2021f 631.2 0.0 33.2 209.5 0.0 242.5 0.4 909.2 2.5
2022f 631.2 0.0 33.2 209.5 0.0 243.5 0.4 931.5 2.5
Page 20
The December 2010 OGJ survey estimates capacity at 627,000b/d. Using company data, BMI has calculated that end-2012 crude distillation capacity was 631,180b/d. We are assuming no change in refining capacity for the foreseeable future. Refined products exports, which have historically exceeded 200,000b/d, will therefore fall steadily over the remainder of the forecast period unless new capacity is introduced.
Importantly, an April 2013 fire at the La Plata refinery is likely to keep production below normal capacity through at least the end of 2013. This will lead to a short-term rise in the country's import burden for refined products.
Revenues/Import Costs
At the time of writing we assumed an OPEC basket oil price for 2013 of US$108.00/bbl, falling to US $104.00/bbl in 2014.
Page 21
Industry Risk Reward Ratings

Latin America - Risk/Reward Ratings
BMI View: While there have been some changes to BMI's Latin American Risk/Reward Ratings (RRRs) this quarter, these have occurred either at the top or the bottom of our ratings table, reinforcing a growing divergence in outlooks for countries like Brazil, Peru, and Colombia relative to the likes of Ecuador, Bolivia, and Mexico. While there is healthy competition amongst our highest rated countries, with Peru receiving the highest upstream rewards score, there is a race to the bottom taking place at the lower end of our ratings table. Indeed, growing political uncertainty, rising resource nationalism, and disappointing reform efforts continue to prevent significant improvement in the Risk/Rewards outlook for those at the bottom.
The consistent pace with which new, significant discoveries are announced offshore Brazil underpins the country's long-term oil production potential, as well as its retention of the top spot in our RRRs for yet another quarter. Indeed, recent discoveries off the country's northern coast are opening up even more prospective areas for exploration. The country's upcoming licensing rounds later in 2013 will also provide the foundation for continued investment into exploration and production (E&P) activities. Downside risks remain, however, particularly as Petrobras continues to struggle financially despite several rounds of fuel price increases since June 2012 (see our online service, February 18, 2013, 'Petrobras: Slowly Righting The Ship').
Colombia and Peru have risen steadily in BMI's upstream ratings in recent quarters, largely on the back of having put much more attractive business environments in place. They will both also benefit from strong production growth in the coming years. Importantly, Peru has overtaken Colombia this quarter to seize second spot, as its potential for production growth, in both oil and gas, receive the highest possible scores emphasising the very strong growth potential in the market. For its part, Colombia remains one of the most important growth markets in Latin America, and we remain bullish on its long-term prospects as well. Indeed, there remains a considerable distance between the top three countries in our upstream ratings and the fourth - Venezuela - indicating the gathering strength of those three relative to the other countries in the region.
At the other end of our ratings table, government involvement in the oil and gas industry is an enduring theme in countries such as Argentina, Ecuador and Bolivia, with nationalisation, price controls and shifting fiscal policy all damaging the energy sectors in these countries to varying degrees. However, high oil prices and significant below-ground opportunities have seen companies continue to invest in these countries
Page 22
despite these risks. This is particularly true in Argentina, where in late-2012 Chevron became the first to sign an agreement with newly nationalised YPF to explore the country's shale potential. Nevertheless, if prices were to fall significantly we would expect some of these markets to be hit very hard. Furthermore, Ecuador, Mexico, Trinidad and Chile all suffer from oil-supply growth deterioration, a trend that is particularly worrying in Mexico, one of the region's main producers. Although the prospect of oil sector liberalisation in Mexico does continue to pose an upside risks to its position near the bottom of our ratings table, the politics of reform continue to be a significant obstacle. It is therefore likely that while some liberalisation will occur under Pena Nieto, it will fall short of the comprehensive reforms that are so badly needed to achieve long-term production growth.
Table: Latin America Oil & Gas Risk/Reward Ratings
Upstream R/R Ratings Brazil Peru Colombia Venezuela Chile Trinidad & Tobago Argentina Mexico Bolivia Ecuador 64.0 68.3 61.5 56.2 45.8 51.0 35.4 30.5 39.9 35.3
Downstream R/R Ratings 58.1 46.2 50.0 37.3 44.9 38.0 44.8 47.5 33.7 36.7
Oil & Gas R/R Ratings 61.0 57.2 55.8 46.8 45.4 44.5 40.1 39.0 36.8 36.0
Rank 1 2 3 4 5 6 7 8 9 10
Scores out of 100. Source: BMI
The main themes arising from BMI's O&G RRRs for Latin America are:
In Venezuela, the death of Hugo Chavez marks a major turning point for the country. The question remains of whether this will also be a turning point for the energy sector. Our core view, under which we believe current Vice President Nicols Maduro will be elected, indicates that there will be no dramatic change, as policy continuity under the banner of Chavismo will endure at least in the short term. This will see continued emphasis on social programmes at the expense of the much-needed investment into and reform of the state-owned Petroleos de Venezuela S.A (PdVSA) -exacerbating the problems in the energy sector. We continue to highlight the risks of investment in Argentina, despite the significant below-ground potential with regards to the country's vast shale reserves. We hold to this view despite what appears to be growing momentum behind investment in the country - from companies such as Chevron, Bridas Corporation, Total, and Wintershall. We believe the most pertinent risks to overseas players are strict
Page 23
capital controls, import restrictions and other direct challenges to doing business, as well as conflict between the government and foreign players in the country's strategic sectors.
Countries with relatively small resource bases - Colombia and Peru in particular - have successfully attracted investment by putting in place more attractive taxation regimes. Colombia's most recent licensing round garnered strong interest due to both its resource potential and the favourable licensing terms for foreign companies. Similarly, the narrative for Peru supports an increasingly attractive sector, leading to its rise to second place in the upstream RRRs. According to our forecasts, Latin America is set to be the fastest-growing region in terms of oil production over the next decade, with its percentage share of global output increasing 17.5% between 2013 and 2021. Much of this growth will stem from production from Brazil's sub-salt fields and significant growth in Venezuelan, Colombian, and Peruvian crude volumes. Conversely, we are currently forecasting that, barring any fundamental shifts, such as large-scale unconventional production, regional natural gas production will stagnate, with the continent maintaining a steady 5.9% share of global production over the period. The bright economic outlook for the region - and concomitant rising fuel consumption - has created opportunities for companies looking to expand their refining operations. We are forecasting strong growth in regional refining capacity over the next ten years. Although Mexico could register the biggest upward move over the coming years, should it manage to staunch a decline in output and open the sector to further foreign investment, the outlook is looking less rosy than in previous quarters. While President Enrique Pena Nieto is placing energy sector liberalisation high on the agenda, the political obstacles look to be increasingly difficult to overcome if he is to implement the large-scale reform that the sector needs.
Brazil And Peru Top The Charts

Latin American Upstream And Downstream Risk/Reward Ratings
Page 24
Upstream: Production Growth Forecasts Reinforce Regional Polarization

A comparison between 2012 and our projected 2018 oil production figures reveals that (of the ten countries in the region covered by BMI) only four countries will record an increase in their percentage share of total regional production. Unsurprisingly, these are the four countries that top our upstream RRRs: Peru, Brazil, Colombia, and Venezuela.
Forecasting Regional Growth

Latin American Oil Production By Country, 2012 & 2018(f), 000b/d
F=forecast, Source: EIA, BMI
Although Brazil maintains the top position in terms of overall upstream risk/rewards, Peru has now surpassed it to assume the top spot in our upstream rating. Due to very strong below-ground fundamentals, particularly in terms of strong proven natural gas reserves and a solid six-year growth outlook for both oil and gas, Peru now receives a score of 75 out of 100 for upstream industry rewards, followed by Venezuela (73) and Brazil (66).
Despite being the fourth largest producer in the region, Colombia's strong third place showing in our upstream ratings is largely being driven by improving country rewards and low industry risks; specifically, a positive privatisation trend, favourable licensing terms, and a low percentage of state-owned assets.
Page 25
Chile retains its place in the middle of our upstream ratings. As a relatively stable albeit modest market, its position underscores the polarization trend that we have been highlighting. Indeed, those countries that rank below it, including Bolivia, Ecuador, Argentina, and Mexico, all have very limited potential to register significant improvements over the near-term.
Table: Latin America Upstream Risk/Reward Ratings
Upstream Industry Rewards Peru Brazil Colombia Venezuela Trinidad and Tobago Chile Bolivia Argentina Ecuador Mexico 75 66 46 73 38 35 51 35 35 39
Upstream Country Rewards 55 70 85 60 70 15 33 40 55 15
Upstream Rewards 70 67 56 69 46 30 47 36 40 33
Upstream Industry Risks 70 55 85 25 80 85 20 20 20 10
Upstream Country Risks 53 59 55 27 33 78 33 59 32 53
Upstream Risks 64 56 75 26 63 83 25 33 24 25
Upstream R/R Ratings Rank 68 64 62 56 51 46 40 35 35 30 1 2 3 4 5 6 7 8 9 10
We have been highlighting the important privatisation trend that is currently underway in Peru, where stateowned Petroper has announced plans to resume production in collaboration with private partners. The timing is right for the state-owned company to regain a slice of domestic oil and gas production, as we forecast both will rise rapidly over the next several years, and remain elevated through to the end of our forecast period in 2022. The underexplored nature of the energy sector, combined with an increasingly attractive business environment for foreign investment, creates further upside risk to our forecasts. It also supports our view that Peru will remain one of the most dynamic economies in Latin America over the forecast period (see 'Petroper To Get Back In The Game', November 16 2012). However, downside risks do exist, particularly from a return to leftist government policies, as well as active militant groups. Indeed, ongoing attacks by the Shining Path group targeting the country's energy sector assets remain a concern, particularly as the government continues to boost its security presence in the country's jungle areas (see 'Security Remains Key To Energy Sector Growth', March 13, 2013).
Page 26
Downstream: Medium-Term Outlook Reinforces Current Dynamics

Rising oil consumption across the region has created opportunities in the downstream segment. With both rising fuel consumption and concrete plans to build several new refineries, Brazil is some distance ahead of its closest rivals. Colombia, Peru and Mexico trail Brazil, but should see similarly strong growth in fuels demand, as well as some investment into refining capacity over the medium term. While Bolivia now occupies the bottom of the downstream ratings table, the bottom three - Venezuela, Ecuador, and Bolivia, all maintain a strong hold on the segment in combination with a deteriorating macroeconomic and demand outlook, leading to their similar, depressed scores. Indeed, the autumn 2012 Amuay refinery explosion in Venezuela underscores the risks associated with poorly maintained and underinvested downstream segments. As such, the medium-term forecast for refining capacity shows that the current dynamics in the downstream segment will likely remain in place.
Regional Refining Capacity Distribution To Remain In Place

2012 & 2018(f) Refining Capacity, 000b/d
F=forecast, Source: EIA, BMI
Whereas the upstream ratings are likely to be fluid over the coming quarters, the downstream ratings should be more stable, although small quarter-on-quarter (q-o-q) changes are to be expected.
Page 27
Table: Latin America Downstream Risk/Reward Ratings
Downstream Industry Rewards Brazil Colombia Mexico Peru Chile Argentina Trinidad and Tobago Venezuela Ecuador Bolivia 50 36 48 38 30 42 33 40 34 34
Downstream Country Rewards 62 56 48 48 36 54 28 31 40 23
Downstream Rewards 53 41 48 40 32 45 32 38 36 32
Downstream Industry Risks 75 80 35 60 80 40 75 40 35 30
Downstream Country Risks 63 59 65 59 71 50 17 31 44 52
DownDownstream stream R/R Ratings Risks 70 72 47 60 76 44 52 36 39 39 58 50 48 46 45 45 38 37 37 34
Rank 1 2 3 4 5 6 7 8 9 10
Argentina - Risk/Reward Ratings

Argentina has moved up our regional ratings table - from eighth to seventh. This is not necessarily due to any improvement in Argentina's business environment itself, but rather because of the more-rapidly deteriorating energy sector outlook for Bolivia and Ecuador. Indeed, nationalisation, price controls and shifting fiscal policy continue to damage the energy sectors in these countries to varying degrees.
Argentina Upstream Ratings

Argentina's relatively low upstream rewards scores reflect the negative effects of resource nationalism and a poor business environment, particularly at a time when the country's macroeconomic picture is worsening considerably. That the country is in the bottom three countries in our upstream risk/reward ranking stands in stark contrast to the estimate that its shale potential could be the third largest in the world behind China and the United States in terms of technically recoverable resources (according to the EIA). Indeed, the country scores poorly in terms of the state control over assets and competitive landscape. Similarly, Argentina's industry risk scores have fallen from 70 to 20, further reflecting the negative privatisation trend and deteriorating environment for licensing agreements. Overall, the total upstream risks score fell to 35, representing continued weakness after a precipitous fall from 66 to 36 in the last several quarters.
Page 28
Argentina Downstream Ratings

A similar picture has emerged it its downstream scores, where YPF is the largest player in refining and marketing. State ownership of assets has increased, in turn decreasing the score it receives in our country rewards ratings (our ratings methodology assumes higher state ownership equals lower rewards for other operators). Consequently, Argentina's overall downstream rating has recently fallen to 45, down from previous quarters where it received a score of 56. Indeed, the recent freeze of fuel prices on the back of rising inflationary concerns generates further weakness in the downstream sector, in addition to increasing the fiscal burden on YPF.
Page 29
Market Overview
Argentina Energy Market Overview
Proven oil reserves of around 2.5bn barrels (bbl) (EIA) in 2013 are the result of a steadily declining reserves base, having been above 3bn bbl as recently as 2001. However, estimates suggest that Argentina potentially has the third largest shale resources in the world, providing the country with an opportunity to become a regional, and potentially global, gas powerhouse if it is able to make the necessary investment.
Indeed, Venezuela currently has 1,026% more proven natural gas reserves than Mexico, the country with the next largest reserves base. Argentina's technically recoverable shale resources are nearly three times larger than Venezuela's proven reserves. If, for example, only a third of Argentina's technically recoverable resources is deemed economically viable, it would represent a massive boon to the Argentine energy sector and broader economy - a dramatic shift from our current forecast for a 28bn cubic metre (bcm) import burden in 2022.
However, Argentine state-owned YPF has been struggling to attract foreign partners and capital in order to develop the massive Vaca Muerta shale play largely on the back of a poor business environment. Some of the key challenges include oil and gas prices (now to be managed by the recently established national hydrocarbon planning commission), currency controls and import restrictions. This is compounded by the fact that Argentina has been largely cut off from the global credit markets ever since it went through the largest sovereign debt default in history. As a result, newly nationalised YPF finds itself in a conundrum; it needs massive foreign investment, particularly into its vast shale reserves, yet is too risky a gamble for most players. However, there does appear to be a small but growing cadre of international and national oil companies seeking to gain first-mover advantage by tapping potentially game-changing shale resources in the Vaca Muerta formation - despite Argentina's risky business environment.
Overview/State Role
Argentina's oil sector had been completely privatised until the October 2004 creation of new state entity, Enarsa. The largest upstream and downstream operator is national company YPF, which was confiscated from Spain's Repsol in April 2012. Four companies, namely YPF, PAE, Petrobras Energa and Chevron San Jorge, account for over 70% of the country's oil production. Four companies also control the downstream oil sector: YPF, Shell, ExxonMobil and Petrobras. Argentina's natural gas industry is in the hands of the private sector. Transportadora de Gas del Sur (TGS) is Latin America's largest pipeline company, delivering two-thirds of total gas consumption, and is largely owned by Petrobras Energa.
Page 30
Transportadora de Gas del Norte (TGN), operating in the north and centre of the country, is the other key gas supplier. Its shareholders include Techint, Compania General de Combustibles (CGC), Total and Petronas of Malaysia.
Licensing And Regulation

Pricing
Argentina is highly dependent on natural gas, and, apart from a brief dip at the peak of the economic downturn in 2009, gas consumption has been rising at an average of 5% per annum, spurred by prices that have been frozen since 2002. The price restrictions have meant that some producers have had to sell gas for as little as US$0.50/mn BTU, or US$18 per thousand cubic metres (mcm), resulting in stagnation or decline in gas output. Consequently, Argentina has been forced to imports more pipeline gas from Bolivia and, increasingly, liquefied natural gas (LNG) from Trinidad & Tobago (T&T), particularly during the peak winter period.
In a bid to reverse its stagnating energy outlook, however, Argentina has continued to reform its fiscal regime - with an early 2013 cut in the export taxes levied on domestically produced oil. With this change, exporters will now realise US$70 per barrel (bbl) for oil sold abroad, rather than US$42/bbl as was previously the case. The change follows a November 2012 revision of wellhead natural gas prices, which are to rise from US$5per mn British Thermal Units (mnBTU) to US$7.50/mnBTU in a bid to further incentivise production.
The picture is not entirely of reform, however. Indeed, in April 2013 the Argentine government announced a six-month freeze of consumer energy prices in an effort to mitigate inflationary pressures in advance of the October 2013 congressional elections. The move is both a reflection of the economic pressures on the government and suggestive of increasing strain on state-owned YPF - and the country's energy sector more broadly at a very critical time. Indeed, these price caps will raise the cost of an already growing import burden just when YPF is seeking to significantly increase its investment into upstream exploration and production (E&P), and into the country's vast shale gas resources in particular.
Government Policy
On a fundamental basis, we see the risks in Argentina as very differently to risks in highly frontier markets with harsh operating environments. Indeed, while frontier markets may have significant risks (security risks, lack of infrastructure, limited routes to market, etc), the relationship that foreign players often have with the
Page 31
governments in these markets is qualitatively different to the relationship in Argentina, making the Latin American country, ceteris paribus, significantly more risky.
In highly frontier and risky markets, foreign companies can have significant leverage over the government and are, broadly speaking, able to negotiate from a position of strength - as they have the power to bring (or not bring) wealth through natural resource development. In Argentina, this relationship is inverted, with the foreign companies that are invited to the negotiating table attending with a significant disadvantage. Current government policies are specifically designed to favour local players over foreign ones. Those specific policies include unfavourable wellhead prices which are determined in a highly politicised fashion, limits on profit repatriation, strict local content requirements, and others. In fact, due to the political dynamics in the country, as well as the resource nationalism that the current government continues to espouse, foreign companies are unlikely to enjoy a stable, mutually beneficial relationship with the government. As such, policy risks in Argentina make it less attractive than other, less developed countries where traditional risks, including those relating to security and infrastructure, can be a deterrent to investment.
Licensing Rounds
In 2007, the third licensing round launched by Rio Negro province attracted bids from eight companies seeking to explore in the Neuqun basin. Offers for the Angostura block came in from US unit Apache Energa Argentina, regional players CGC, Usinas y Terminales Elctricas (UTE), and Estrella Servicios Petroleros and Petrolifera Petroleum. The Tres Nidos Sur block attracted bids from Roch and Antrim Energy. Geodyne Energy, another Canadian independent, submitted bids for the Blanco de los Olivos and Catriel Viejo Sur blocks. Petrolifera Petroleum also made an offer for the Puesto Guevara block. The round followed the signing of E&P contracts for four blocks in Neuqun Basin offered as part of Rio Negro's second licensing round. According to the province's Deputy Governor, Mario De Rege, the first two rounds should result in investment of up to US$200mn.
Local government-owned Gas y Petrleo del Neuqun (G&P) is reportedly planning a third bidding round for oil and gas exploration licences in the western Argentine province of Neuqun, according to an April 2010 Platts report. Local newspaper La Maana Neuqun reported that the round will offer 10 previously unexplored blocks in the Neuqun Basin that are said to hold tight and shale gas potential. G&P conducted its first two bidding rounds in 2009, awarding 18 exploration licences for low-, medium- and high-risk blocks. The blocks were awarded to Total, YPF and Petrobras and Argentine firms Energy Operations, Raiser and Rovella Carranza. G&P'S CEO Ruben Etcheverry said that he expects the companies to invest about US$60.9mn over four years and drill 13 wells at the blocks. G&P will take a 15% stake in each of the blocks.
Page 32
Argentina has delayed the launch of a licensing round that would have put 32 offshore blocks up for grabs because of the tumult that has rocked global markets in the wake of the US debt rating downgrade, a source at Enarsa told Reuters on August 8 2011.
International Energy Relations

Falkland Islands
Argentina continues to claim the Falkland Islands (which it calls Islas Malvinas), nearly 180 years after the British occupation of the islands. Following Argentina's unsuccessful military attempt to regain the islands in 1982, the dispute has remained confined to the sphere of diplomatic relations. A small-scale drilling campaign offshore Falklands in the late-1990s, however, which revealed the potential presence of commercial hydrocarbons, reignited Argentina's drive to regain the islands. In preparation for the submission to the UN of a formal claim to the islands, in 2006 Buenos Aires ended an exploration cooperation agreement with the UK.
In April 2009, Argentina lodged a formal legal claim with the UN for control over large stretches of the South Atlantic seabed, which includes the Falkland Islands. The discovery of potential oil plays south of the Falklands in the 1990s has boosted interest in exploration in the area that could rekindle long-standing territorial conflict between the two countries. On April 21 2009, the Argentine foreign ministry presented the UN with 40 volumes of documentation stating the country's claim to 1.7mn sq km of seabed, which includes the UK overseas territories of the Falklands, South Georgia and South Sandwich Islands and a large portion of Antarctica. Argentina's claim, submitted under Article 76 of the 1994 UN Convention on the Law of the Sea (UNCLOS), aims to expand its maritime territory by 35% to 370 nautical miles from the shore on the basis of a claimed extension of the Argentine continental shelf.
According to Buenos Aires, the submission is the culmination of 11 years of research and 12 maritime expeditions. Under UN laws, submission of a counter-claim would prevent either nation from exploiting the contested seabed until a diplomatic agreement is reached. Although geological evidence from the 1990s suggests that large hydrocarbon accumulations may have once been present offshore the Falklands, many industry experts are sceptical of the area's potential for commercial production. Following the exit of the majors in the 2000s, exploration activity has mostly been confined to small-scale British independents. Their operations, however, are under serious threat following the UK's decision to submit a counter-claim in May 2009. Any field development is now likely to be banned pending the UN resolution. Moreover, it is doubtful that either Argentina or Britain will accept the UN ruling, regardless of the decision, meaning that oil companies' operations in the Falklands will continue to be plagued by legal uncertainties.
Page 33
Far from leading to a resolution of the dispute, the submission of the case to the UN appears to have raised tensions, with both sides acting as though the case had already been decided in their favour. In December 2009 Argentina passed a law defining the country's provincial borders, which assigned the UK-administered territories to its southernmost province of Tierra del Fuego. Buenos Aires followed up the enactment of new statute by officially re-iterating its claims over the Falklands, South Georgia and the South Sandwich Islands on January 4 2010. The British Foreign Office responded by delivering a formal note of protest to the Argentine embassy in London on January 18.
The exchange of claim and counter-claim took place as AIM-listed explorers Rockhopper Exploration, Desire Petroleum and Falklands Oil & Gas began a drilling campaign in the contested area in the South Atlantic summer of 2009-10. The start of the campaign created an anomalous situation under international laws, as the submission of two competing territorial claims under Article 76 of the 1994 UNCLOS theoretically prevents either nation from exploiting the contested seabed until a diplomatic agreement is reached.
Rockhopper has declared that its Sea Lion discovery is commercial and has set out a US$2bn plan to bring Falklands oil to market by the middle of the decade.
Gas Imports
Argentina is linked to its neighbour Chile via two pipelines: Gaseoducto del Pacfico and GasAndes. With Chile bringing onstream two LNG import terminals in 2009-10 there is a possibility of it eventually exporting gas to Argentina through the existing pipeline infrastructure, reversing the long-standing energy relationship between the Andean neighbours. The Pacfico pipeline began operating in 1999 but in recent years has been running at a fraction of its 3.1bcm capacity because of the imposition of restrictions on gas exports by the Argentine government, which has struggled to boost production to meet growing domestic demand. The GasAndes trunkline runs from the city of La Mora to the Chilean capital, Santiago. In 2009, a year after Argentina became a net gas importer, total volumes of gas received by Chile from its eastern neighbour stood at merely 0.84bcm, down from 4.07bcm in 2000, according to Cedigaz data.
In September 2009, Argentina expressed its willingness to serve as a transit state for the gas trade between Bolivia and Uruguay. A preliminary agreement on the Bolivia-Uruguay gas transit conditions was reached during a meeting of Argentine Minister of Planning Julio de Vido and Ral Sendic, the Uruguayan minister of industry. According to online news source Hidrocarburos Bolivia, Argentina agreed to collect gas transit
Page 34
fees only, dropping its earlier demand to tax the Bolivian gas destined for Uruguay. Uruguay would receive Bolivian gas via the Cruz Del Sur pipeline, which runs from Buenos Aires to Montevideo.
On July 18 2012, Bolivia's state-owned YPFB and Argentina's Enarsa signed an 'interruptible natural gas purchase and sale' contract to supply Argentina with an additional 6mn cubic metres per day (Mcm/d) of gas for 2012-2013 (2.19bcm per annum). This is in addition to a 2010 bilateral gas deal which stipulated that Bolivia would provide a steadily increasing supply of gas to Argentina to reach 27.7Mcm/d (10.1bcm) by 2017. As a result of the agreement, Argentina expects to import 16.3Mcm/d from Bolivia in the second half of 2012 - a 20% increase from the first six months of the year.
Argentina - Major Upstream Projects
Table: Argentina - Upstream Projects Database
Name
Field Name
Status
Est. Peak Oil/ Est. Peak Gas Liquids Output, Output (bcm) (b/d) na 87,934 na 40,000 2.9 na na na
Type of Onshore/ Project Offshore Gas na Oil Oil Offshore Offshore Onshore Onshore
Carina Aries Anticlinal Grande Chihuido de la Sierra Negra (ChSN) El Trapial Expansion Project
Carina and Aries (Block CMA-1) Cerro Dragon Chihuido de la Sierra Negra (ChSN) El Trapial (Huantraico Block, Neuquen Basin)
Producing (since 2005) Producing Producing Producing
na = not available. Source: BMI
Oil And Gas Infrastructure

Oil Refineries
Argentina currently has 10 refineries giving the country a total capacity at the start of 2011 of about 631,000 barrels per day (b/d). Theoretically, this is more than equal to the task of meeting the country's demand for oil products, with the notable seasonal exception of diesel. Government intervention in the market has, however, led to Argentina occasionally importing gasoline as well. Capacity has remained relatively stable in the country since 1971, and we do not currently expect any significant capacity additions in the near future. YPF is currently the major player in Argentine refining, with more than 50% of total capacity.
Page 35
Table: Refineries In Argentina
Refinery La Plata Buenos Aires Lujan de Cuyo Campana San Lorenzo Bahia Blanca Plaza Huincul Campo Duran Lomas de Zamora Dock Sud Total Capacity Planned Additional Capacity General Mosconi II Lujan de Cuyo
Capacity (b/d) 189,000 110,000 105,668 87,000 45,800 30,500 25,159 25,788 8,000 4,000 631,184
Owner YPF Shell YPF ExxonMobil Refineria San Lorenzo Petrleo Brasileiro YPF Refinor SA DAdP DAdP
Completed 1925 1931 na na 1938 na na 1992 na 1993
Details na na Upgrade started in 2009 na na na na na na na
150,000 na
30-company consortium YPF
na 2012+
US$2.3bn diesel refinery Secondary processing
na = not available. Source: Company data
Buenos Aires is home to about 68% of Argentine refining capacity, and the broader Buenos Aires Province contains six of the country's 10 plants with a combined capacity of 430,000b/d.
La Plata: YPF's 189,000b/d La Plata refinery in Buenos Aires is the largest in Argentina, accounting for around 30% of the country's capacity. It produces fuel oil, diesel oil and gasoline, as well as lubricants, asphalt and paraffin. More than one third of the country's consumed fuel is produced at La Plata.
In April 2013, the La Plata refinery was taken offline for repairs as a result of a fire. Initial repairs allowed a partial restart of operations after a few days, but it will likely take a month or more for repairs to conclude. At the time of writing, it is likely that it will take the remainder of 2013 for the refinery to begin producing at full capacity again. Indeed, the refinery's outage has increased the country's refined products import burden at a time when consumption continues to grow and fuel prices remain fixed due to inflationary concerns.
Buenos Aires: Shell's Buenos Aires refinery is located in the Doc Sud area of the city, giving it access to crude feedstock and product transport routes via the local port. The refinery is almost exclusively a
Page 36
processor of Argentine crudes, including those from Tierra del Fuego. Crude is stored at a dedicated 4.8mn bbl tank farm on site.
Lujan de Cuyo: Located in Mendoza Province in the foothills of the Andes, YPF's Lujan de Cuyo receives crude from local fields and from the east-coast port of Bahia Blanca by pipeline. In October 2009, YPF announced that it would invest US$396mn over three years to upgrade the refinery, with much of the investment to be directed towards raising the quality of the gasoline and diesel produced and improving energy use.
General Mosconi II (Proposed): In December 2006, the government announced that it had reached agreement with several international oil companies (IOCs) to build a new 150,000b/d refinery. According to press reports in January 2006, the government held talks with a number of IOCs over construction of the US $2.3bn diesel fuel refinery. The project, provisionally called General Mosconi II (the first plant with such a name, Petroquimca General Mosconi set up in 1970, is a petrochemicals plant), would produce refined products for both the domestic and international market. There is, however, no indication at this point that the project will ever go ahead.
Service Stations
Four major players, led by YPF, control the majority of the fuels distribution network, with a combined market share of over 90% and around 4,400 retail stations. Repsol itself has about a third of the market.
Oil Terminals/Ports
According the Petroleum Economist, Argentina has 15 oil terminals, around half of which are clustered around Buenos Aires and its riverine hinterland.
Oil Pipelines
Argentina has three main oil pipelines, which together indirectly link the oil export terminal at La Plata on the east coast with the San Vincente oil terminal on Chile's west coast. Two of the pipelines are domestic and link the country's major Neuqun Basin oil producing region with the refineries at Plaza Huincul and Lujan de Cuyo. To the east, both pipelines connect to the oil terminal and refinery at Baha Blanca. A single pipeline runs north from the terminal to the La Plata oil terminal near Buenos Aires, before doubling back to the Lomas de Zamora mini-refinery. The country's one international link is the 431km Transandino oil pipeline. The pipeline, which can transport 115,000b/d, links the Neuqun Basin with San Vincente.
Page 37
LNG Terminals
Argentina currently has one floating liquefied natural gas (FLNG) import terminal with a capacity of 3bn cubic metres (bcm), and another was slated to open in mid-2011. The existing terminal is a floating regasification vessel, moored at the port of Baha Blanca. In September 2010, Excelerate Energy announced that YPF and Enarsa had commissioned it to build a 5.2bcm floating regasification plant 48km north of Buenos Aires. The terminal, dubbed Escobar LNG, was due onstream in May 2011.
Although Argentine LNG import capacity is limited, both Chile and Uruguay have put forward proposals to supply Argentina with LNG regasified outside the country and then imported via pipeline. The proposals mentioned Chile's Quintero regasification terminal as one possible source of gas, while another is a proposed terminal in Uruguay.
Baha Blanca GasPort
The Baha Blanca GasPort (BBGP) has a maximum capacity of around 3bcm. The facility comprises a floating regasification vessel known as the Energy Bridge Re-gasification Vessel (EBRV), moored alongside a dedicated jetty, from which it feeds gas into the national gas distribution system. The project was developed by Excelerate Energy and YPF.
Escobar LNG
Escobar LNG is a floating regasification plant, situated some 48km north of Buenos Aires. The project was launched in September 2010 by US-based Excelerate Energy, Spain's YPF and Argentina's Enarsa and received its first cargo in June 2011. The facility has a regasification capacity of 5.2bcm per year.
Southern Cone LNG (Planned)
The Southern Cone LNG terminal is scheduled to come onstream in 2014. In June 2011, Qatargas signed a 20-year LNG supply deal with Enarsa to feed the Southern Cone LNG Terminal. The deal will see Qatar, the world's largest LNG producer, ship as much as 5mn tpa, or 6.9bcm, of LNG to the Latin American country through the mid 2030s.
Gas Storage
Argentina first started storing gas with the inauguration of the Diadema gas storage pilot project in 2001. Located in the southern province of Chubut, the Diadema facility is part of a depleted gas field. Diadema
Page 38
was joined in 2003 by the Lunlunta Carrizal gas storage facility, located close to Mendoza city in Mendoza province. The facility, operated by YPF, also came onstream as a pilot project, with an injection and withdrawal capacity of 1mn cubic metres per day.
Gas Pipelines
Gasoducto del Pacfico (TransGas)
The Gasoducto del Pacfico (also known as TransGas), links the southern Chilean city of Concepcin with Argentina's Neuqun Basin. With Chile's first LNG import terminal onstream there is the possibility of Chile eventually exporting gas to Argentina through the existing pipeline infrastructure, reversing the longstanding energy relationship between the Andean neighbours. Argentina's energy supplies to Chile have been falling progressively over the current decade on the back of lower output and growing domestic demand. The decline in the gas trade accelerated sharply after 2004, following the imposition of gas restrictions by the Argentine government.
Chile's Empresa Nacional del Petrleo (ENAP) announced on June 18 2009 that it had increased its stake in the operating entity Gasoducto del Pacfico from 18.2% to 22.8% at a cost of US$6.88mn, while Gasco raised its stake from 20% to 30% for US$9.97mn. A 15% stake in the pipeline was acquired by Argentina's Trigas, a subsidiary of Yaconi-Santa Cruz. According to energy news provider Platts, the stakes were acquired from YPF and US independent El Paso, which have exited the consortium. Another 30% of Gasoducto del Pacfico remains in the hands of North American pipeline company TransCanada.
The Pacfico pipeline began operating in 1999 but in recent years has been running at a fraction of its 3.1bcm capacity because of the imposition of restrictions on gas exports by the Argentine government, which has struggled to boost production to meet growing domestic demand. As well as receiving imports via Pacfico, Chile imports Argentine gas through the GasAndes pipeline, with the trunkline running from the city of La Mora to the Chilean capital Santiago. In 2008, the year Argentina became a net gas importer, total volumes of gas received by Chile from its eastern neighbour stood at merely 0.69bcm, down from 4.07bcm in 2000, according to Cedigaz data.
Gasoducto del Noreste (GNEA)
Construction of the Gasoducto del Noreste (GNEA) gas pipeline across north-eastern Argentina began in 2011, with completion scheduled for 2014-2015, the governor of the participating Misiones province announced on June 7 2011. The project was originally due online in 2011, but no engineering contracts have
Page 39
yet been signed. Although the project has been delayed, there are some signs of progress after President Christina Fernandez de Kirchner opened a tender for construction contracts in February 2011.
Misiones Governor Maurice Closs made the announcement after signing project plans for GNEA with the governors of the four remaining participating provinces - Chaco, Corrientes, Formosa and Salta - and Argentina's Minister of Planning Julio De Vido. The 1,460km GNEA pipeline will have an initial capacity of 7.3bcm per annum. It is designed to be expanded to 11bcm per annum by the end of the decade. No cost estimates or sources of funding have been specified.
Tierra del Fuego Link
Argentina constructed a new 38km subsea gas pipeline in 2010 to double the supply capacity from the southernmost island of Tierra del Fuego to the mainland. The new pipeline, which links up with the national trunkline system, will help to connect gas fields offshore Tierra del Fuego to large domestic markets further north, stimulating E&P in the southernmost province.
The new pipeline runs parallel to an existing 30-year-old subsea link, connecting Cape Espritu Santo in the Argentine section of Tierra del Fuego to Cape Vrgenes in the mainland province of Santa Cruz. The pipeline adds 6.2bcm of carrying capacity, doubling Tierra del Fuego's current maximum send-out volumes. The project was carried out on behalf of the government by a JV between Dutch firm Royal Boskalis Westminster and Swiss-based Allseas Group at a cost of US$265mn.
Bolivia-Argentina Interconnector
In March 2010, Bolivia signed a long-awaited gas supply deal with Argentina, which should see a tenfold rise in bilateral energy trade over the course of the current decade. The deal binds the two sides to gradually raising gas trade volumes from around 1.7bcm to 10.1bcm.
The majority of new gas will come from new phases of the Margarita field in the southern Bolivian province of Santa Cruz, which is operated by the Caipipendi consortium led by YPF. Exports did not pick up until May 2011, when a new 50km Gasoducto de Integracin Juana Azurduy (GIJA) interconnector to Argentina came online. Initial annual capacity of 2.8bcm will be gradually boosted to a maximum of 10.1bcm envisaged under the new supply contract.
Page 40
Competitive Landscape
Executive Summary
The government in April 2012 re-nationalised YPF through the seizure of a 51% stake and former owner Repsol of Spain is seeking US$10bn in compensation. The Argentina's internal commerce secretary has announced a six-month freeze of consumer gasoline and diesel prices as the government seeks to stem inflationary pressures in advance of the October 2013 congressional elections. Despite company statements to the contrary, it is feared that this fuel price freeze will have a negative impact on YPF. These price caps will raise the cost of an already growing import burden. YPF and other downstream players, including Royal Dutch Shell, Axion Energy and Brazil's Petrobras, will have to import gasoline and diesel at market prices and then sell them domestically at a loss. A new petroleum exploration and production fund will be created by the government in a bid to become self-sufficient in the oil and gas sector. According to a declaration published by the government-owned Official Bulletin on April 19 2013, the US$2bn fund will be known as the Argentine Hydrocarbon Fund and will be authorised to lend capital, contribute money and purchase securities issued by oil firms in which the government has an equity stake. Enarsa holds ownership rights to exploration permits and exploitation concessions on the Argentine Continental Shelf. It participates in exploration activity in partnership with international oil companies (IOCs). YPF is the leading Argentine producer, with assets located in the Neuqun, Gulf of San Jorge, Northeast, Austral and Cuyana basins. These fields account for more than half of Argentina's oil production. It is also Argentina's leading oil refiner, operating three facilities with 319,500 barrels per day (b/d) of capacity, as well as a half share in the Refinor complex (26,100b/d gross). This provides the group with over 50% of fuels supply, while its service station chain accounts for over 30% of the retail market. The CEO of YPF, Miguel Galuccio, has said that the company could postpone its shale exploration programme in 2013 owing to high equipment costs, reports Reuters. YPF intended to spud 132 oil wells at the Vaca Muerta shale formation in Patagonia in 2013. YPF could adjust the pilot plan of the programme, worth around US$1.36bn, if it fails to secure equipment and workers at the right price, Galuccio said. Dow Chemical has signed a memorandum of understanding (MoU) with YPF to jointly develop the vast Vaca Muerta shale gas reserves. According to YPF, the company will enter into final negotiations with Dow focused on establishing a joint venture (JV) in order to develop the El Orejano block. Maria das Gracas Foster, CEO of Brazilian oil and gas company Petrobras, has confirmed that the company is looking to sell its Argentine subsidiary and related assets, reports Rig Zone. The potential sale of Petrobras' Argentine business is part of a wider US$9.9bn divestment plan. It is believed that preliminary talks have taken place over the sale, but Gracas Foster declined to comment on the specifics due to the 'sensitive nature' of the discussions. Behind YPF, Petrobras Energa has been the second most significant Argentine oil and gas sector participant, thanks to its purchase of the former Perez Companc group. In 2011, US major Chevron achieved total production in Argentina of 35,000b/d of crude oil (26,000b/d net) and 170 thousand cubic metres (mcm) per day of natural gas. YPF and Chevron have signed an agreement for a pilot project to develop the country's vast shale reserves in the Vaca Muerta formation. The plan will involve the drilling of 100 wells in 2013 at a shared cost of US$1bn.
Page 41
ExxonMobil produces gas from the Sierra Chata and Aguarague fields. Bridas Corporation in September 2012 completed the purchase of the Campana refinery and 700-plus filling stations in Latin America. Royal Dutch Shell has 110,000b/d of refining capacity and a retail market share in excess of 20%. China National Offshore Oil Corporation (CNOOC) took a 50% stake in Bridas Corporation in March 2010, increasing the Chinese company's proven reserves by 318mn boe and adding around 46,000boe/d to its production. Total of France produced 4.1bcm of Argentina's gas in 2011. It accounted for 14,000b/d of oil production. China's state-run China Petrochemical Corporation (Sinopec) agreed in December 2010 to buy Occidental Petroleum (Oxy)'s assets in Argentina for US$2.45bn. In a statement, Sinopec said that the assets held gross P2 reserves of 393mn barrels of oil equivalent (boe). Apache Energy of the US acquired the Argentine upstream interests of Pioneer in a US$675mn deal in 2006. It produced 2.2bcm of gas and 12,615b/d of oil and liquids in 2011.
Table: Key Players - Argentine Oil And Gas Sector
Company
2010 Sales (US$mn unless otherwise stated) EUR49bn na ARS11,972 na 354,617* na na
% share of total sales 100 na na na na na na
No. of employees na 450 3,696 2,100 603 360 2,998
Year established 1993 1978 1946 1911 1998 1989 1914
Total Assets, 2010 (US$mn unless otherwise stated) EUR58bn na
Ownership
YPF Total Austral Petrobras Energia Esso Petrolera Pan American Energy Chevron Argentina Shell Argentina
Public 100% Total
ARS23,083 59% Petrobras na 228,238* 100% ExxonMobil 100% Bridas
na 100% Chevron na 100% RD Shell
*2008; na = not available. Source: BMI, Company data
Page 42
Table: Key Upstream Players
Company YPF Total Argentina Petrobras Energa PAE Chevron Argentina Esso Petrolera Occidental
Oil production (000b/d) 304 14 40 75 31 na 36
Market share (%) 46e 2.3e 6.1e 11.5e 5e na 5.5e
Gas production (bcm) 16.6 3.9 3.1 3.9 0.27 0.7 0.2*
Market share (%) 37.3e 8.6e 7e 8.8e 0.6e na 0.5*
*2008; e = estimate; na = not available. Source: BMI, Company data 2009
Table: Key Downstream Players
Company YPF Petrobras Energa/Oil Combustibles Shell Argentina
Refining capacity (000b/d) Market share (%) Retail outlets Market share (%) 320 80.8 100 51 13e 16 1,668 605 1,025 31 15e 23
*2005; e = estimate. Source: BMI, Company data 2009
Page 43
Company Profile
YPF
SWOT Analysis
Strengths
Leading domestic oil and gas producer. Dominant position in downstream oil segment. Extensive exploration portfolio.
Involvement in key energy infrastructure. Weaknesses
Over-dependent on Argentina. Mature and competitive industry. Vulnerable to state energy policy. Steady domestic and regional demand growth. Scope for productivity gains and cost reductions. Can influence government energy policy. State intervention in tariffs and taxation. Uncertain political and fiscal outlook Repsol compensation battle.
Opportunities
Threats
Company Overview
YPF is the leading Argentine producer, with assets located in the Neuqun, Gulf of San Jorge, Northeast, Austral and Cuyana basins. These fields account for more than half of Argentina's oil production. In 2010, YPF produced an average 541,000boe/d of oil and gas. It is also Argentina's leading oil refiner, operating three facilities with 320,000b/d of capacity, as well as a half share in the Refinor complex (26,100b/d gross). This provides the group with over 50% of fuels supply, while its service station chain accounts for over 30% of the retail market.
Page 44
Strategy
YPF and Chevron have signed an agreement for a pilot project to develop the country's vast shale reserves in the Vaca Muerta formation. The plan will involve the drilling of 100 wells in 2013 at a shared cost of US$1bn. The deal represents the first agreement signed between YPF and an international oil company (IOC) since the Argentine government expropriated YPF from Repsol in early 2012. YPF will invest ARS60mn (US$12mn) in the drilling of an unconventional well in the country's Chubut province, Rigzone reports. The decision is part of Argentina's strategy to uncover new sources of shale oil and gas outside the Neuquen province. President Cristina Kirchner, Chubut Governor Martin Buzzi and YPF CEO Miguel Galuccio have all spoken of the well's potential, with Buzzi hailing its approval as a 'new milestone in Argentina oil history'. Dow Chemical has signed a memorandum of understanding (MoU) with YPF to jointly develop the vast Vaca Muerta shale gas reserves. According to YPF, the company will enter into final negotiations with Dow focused on establishing a joint venture (JV) in order to develop the El Orejano block. YPF signed a similar agreement with Chevron at the end of 2012, but its progress has been stymied by an ongoing legal dispute that threatens the company's presence in the country. The El Orejano block covers 41sq km in the Neuqun province, the epicentre of shale gas exploration in Argentina. Estimates of the country's technically recoverable shale gas resources place it third in the world, only behind China and the US. The most recent confirmation of the country's shale potential is the announcement by Royal Dutch Shell that its subsidiary O&G Developments has discovered hydrocarbons in the Sierras Blancas area of the Vaca Muerta formation in Neuqun. The CEO of YPF, Miguel Galuccio, has said that the company could postpone its shale exploration programme in 2013 owing to high equipment costs, reports Reuters. YPF intends to spud 132 oil wells at the Vaca Muerta shale formation in Patagonia in 2013. YPF could adjust the pilot plan of the programme, worth around US$1.36bn, if it fails to secure equipment and workers at the right price, Galuccio said. YPF has concessions on 40% of Vaca Muerta, which is estimated to hold 23bn barrels of oil equivalent. YPF is planning to boost capital investments by 60% as it 'aggressively' explores shale, chief executive Miguel Galuccio said. 'We're not waiting for Chevron' to develop shale, he told reporters at the company's headquarters after reporting fourth-quarter profit that almost doubled to ARS1.02bn. Galuccio said YPF and Chevron have been meeting weekly to hammer out final details of their accord. YPF's 'aggressive but ambitious' five-year strategic development plan is going to focus on reversing Argentina's declining oil production and reinstate its status as a net oil exporter. The potential prospectivity of its unconventional plays could be a game changer for the Argentinean energy sector, and the country's entire economy. The new strategy has two main pillars: marginal fields and enhanced oil recovery (EOR) for mature fields, plus tapping Argentina's unconventional resources. New YPF CEO,
Page 45
Miguel Galuccion, said that the company will invest US$7bn each year to increase hydrocarbons production to 216mn boe by 2017. As a point of reference, Repsol-YPF had previously estimated that it would take US$25bn per year to double the country's current oil and gas production. YPF is evaluating the construction of a new refinery that would have the capacity to process about 200,000b/d of crude oil. The refinery would be up and running by 2018 or 2019, then expanded in 2023, said Daniel Palomeque, head of the company's La Plata refinery. Palomeque told participants at a conference in Buenos Aires that YPF aims to invest US$12.5bn in refining and logistics in the next five years.
Market Position
YPF is the leading Argentine producer, with assets located in the Neuqun, Gulf of San Jorge, Northeast, Austral and Cuyana basins. These fields account for more than half of Argentina's oil production. In 2010, YPF produced an average 541,000boe/d of oil and gas. It is also Argentina's leading oil refiner, operating three facilities with 320,000b/d of capacity, as well as a half share in the Refinor complex (26,100b/d gross). This provides the group with over 50% of fuels supply, while its service station chain accounts for over 30% of the retail market. Argentina forms the core of Repsol's production and reserve portfolio. YPF has been at the forefront of exploration in the Neuqun Basin, and its initial drilling programme gave an indication of the region's potential. The company announced in December 2010 that it had discovered 127bcm of gas after an initial four-well drilling programme. YPF's CEO, Sebastian Eskenazi, said that initial exploration had been limited to a small section of the prospective area, and that that 'huge volumes' of tight gas had been identified that would guarantee the country's gas supplies for many years to come. In May 2011, YPF announced that it had discovered 150mn bbl of shale oil at a block in the Neuqun Basin - the company's second major unconventional discovery at the Loma La Lata Block. YPF has said that it is still in the early stages of exploration at the site and planned to invest US$270mn in 2011 to drill 17 new horizontal wells and fracturing 14 existing wells. GNL Escobar (GNLE), the second LNG import facility in Argentina, started operations on June 8 2011. The facility was jointly developed by YPF, Enarsa and US-based Excelerate Energy. GNLE is based on the design of Excelerate's GasPort and has a base load throughput capacity of 14.26Mcm/d as well as a peak throughput capacity of 17Mcm/d. YPF said it has acquired control of Metrogas, Argentina's largest gas distributor, from BG Group for US$9.7mn. YPF said in a filing with securities regulators that it would now own 70% of the gas utility's stock. Ordinary revenues for Q113 were ARS18,634mn, a 25.5% increase compared with Q112. Operating income for Q113 increased by 1.3% and EBITDA for Q113 was
Page 46
ARS5,365mn, a 20.7% increase compared with Q112. Net income for Q113 was ARS1,258mn, a 2.8 % decrease compared with Q112. During Q113, crude oil production was 226,300b/d, a 0.7% decrease compared with Q112, while natural gas production was 31.4Mcm/d, down 3.7% year-on-year.
Financial Data
YPF Operating income

ARS7,903mn (2012) ARS7,188mn (2011)))
Operational Data
Oil and gas production:

541,000boe/d (2010) 572,000boe/d (2009)
Page 47
Petrobras
SWOT Analysis
Strengths
Good spread of upstream assets. Some production upside potential. Distribution infrastructure exposure.
Significant downstream oil presence. Weaknesses
Mature and competitive industry. Vulnerable to state energy policy. Steady domestic and regional demand growth. Scope for productivity gains and cost reductions. Platform for LatAm regional expansion. State intervention in tariffs and taxation. Uncertain political and fiscal outlook. Potential for market to slow.
Opportunities
Threats
Company Overview
Petrobras has been active in Argentina since 1993, but significantly increased its holdings with the US$1.028bn purchase of a 58.62% stake in Perez Companc (Pecom Energa) in 2002. The Pecom unit was rebranded as Petrobras Energa in April 2003, with responsibility for exploration, production and power assets and the Buenos Aires office continuing to serve as the Latin American headquarters. Refining and marketing were centralised under the Petrobras Argentina subsidiary. Petrobras Argentina's domestic sales of liquid fuels totalled 2.2Mcm in 2010. These figures accounted for a market share of 11.1%.
Strategy
Maria das Gracas Foster, CEO of Petrobras, has confirmed that the company is looking to sell its Argentine subsidiary and related assets, reports Rig Zone. The potential sale
Page 48
of Petrobras' Argentine business is part of a wider US$9.9bn divestment plan. It is believed that preliminary talks have taken place over the sale, but Gracas Foster declined to comment on the specifics due to the 'sensitive nature' of the discussions. Behind YPF, Petrobras Energa has been the second most significant Argentine oil and gas sector participant, thanks to its purchase of the former Perez Companc group. Given that there is little opportunity for Petrobras to apply its deepwater drilling skills in Argentina, and the demands of the huge Brazilian sub-salt upstream portfolio, it is no surprise that certain of these non-core assets are now up for sale. It was disclosed in February 2013 that Petrobras is in advanced talks to sell stakes (of a possible 51%) in its refineries and other assets in Argentina for US$400mn to Argentine company Oil Combustibles, a source close to the Brazilian company told Reuters. The company had previously bough the San Lorenzo refinery from Petrobras. Reuters had reported in November 2012 that Petrobras was interested in selling its stakes in the Dr. Ricardo Eliabe refinery in Buenos Aires and in the Refinor refinery in the province of Salta. Petrobras began taking bids for its Argentine assets in December 2012 as part of its plan to sell an estimated US$14.8bn of assets to help finance a US $237bn five-year expansion plan, the world's largest corporate investment programme.
Market Position
In 2010, the Baha Blanca refinery processed 24,404b/d of oil, accounting for 80% of its installed capacity of 30,500b/d. During 2010, the San Lorenzo refinery processed 32,761b/d, accounting for a 68% of its installed capacity. On May 4 2010, Petrobras Argentina approved the terms and conditions for the sale of its refining business in San Lorenzo, the loading and unloading unit and the fuels sales network of approximately 360 sites and associated client portfolio. The price offered by the buyer, Oil Combustibles, was approximately US$36mn. The company has a presence in - and obtains crude oil, natural gas and liquefied petroleum gas (LPG) from - Argentina's most important oil basins. In 2010, the company reached a production level of 102,400boe/d, and made exploration and development investment totalling US$224mn. Production fell 12% year-on-year in 2010, attributable to the natural decline of mature fields in Argentina, and divestment of the company's assets in Peru and Ecuador. Production in Argentina alone averaged 86,400boe/d, representing a 7% y-o-y fall. As of December 31 2010, Petrobras Argentinas proven liquid hydrocarbon and natural gas reserves totalled 248.4mn boe (107.8mn bbl of oil and 23.9bcm of gas). DeGolyer and MacNaughton, international technical consultants, audited approximately 71% of the company's total estimated reserves and 100% of estimated reserves operated by the company. Power assets include a 27.33% equity interest in the Edesur electricity distribution company that serves greater Buenos Aires, a 29.3% interest in the 120MW Uruguai
Page 49
hydroelectric plant, and a 9.2% interest in the 1,400MW Piedra del Aguila hydroelectric plant.
Financial Data
Operating income

ARS1,442mn (2010) ARS918mn (2009) ARS1.95bn (2008) ARS1.53bn (2007) ARS2.15bn (2006)
Net income

ARS610mn (2010) ARS925mn (2009) ARS776mn (2008) ARS762mn (2007) ARS1,416mn (2006
Operational Data
Oil production:

38,200b/d (2010) 40,300b/d (2009) 41,400b/d (2008)
Gas production:

2.8bcm (2010) 3.1bcm (2009) 2.6bcm (2008)
Refining capacity:

80,800b/d (2009) 81,000b/d (2008)
Company Details
Petrobras Energa SA Avenida de Mayo 701 Piso 16 Buenos Aires C1084ABA Argentina
Tel: +54 (11) 4344 6000 Fax: +54 (11) 4344 6315
Page 50
Chevron
SWOT Analysis
Strengths
Significant share of domestic oil production. Good spread of exploration interests. Share in oil transport infrastructure.
Strong presence in lubricants sector. Weaknesses
No refining or fuels marketing presence. Limited production upside potential. Steady domestic and regional demand growth. Some exploration upside potential. State intervention in tariffs and taxation. Uncertain political and fiscal outlook. Potential for market to slow.
Opportunities
Threats
Company Overview
In Argentina, Chevron produces crude oil and natural gas through subsidiary Chevron Argentina. Chevron has operated interests, ranging from 18.8% to 100% in four concessions. In the Neuqun Basin, Chevron Argentina continued with a series of projects designed to reduce declines in production at the El Trapial Field in 2011. In December 2011, it successfully extended the onshore El Trapial concession until 2032. During 2011, total daily production in Argentina averaged 35,000 barrels (bbl) of crude oil and 170 thousand cubic metres (mcm) of natural gas. The company holds a 14% interest in Oleoductos del Valle.
Strategy
The group appears committed to Argentine investment and is steadily beginning to ramp up capital inflows to the country. However, concerns over the continual imposition of price tariffs, for example, or the freeze on gas prices for residential users, may lead the firm to scale back its investment plans. Despite the relatively limited nature of
Page 51
Argentina's upstream, the group feels confident of volume growth and revenue expansion, should the government's interventionist stance be relaxed. YPF and Chevron are expected to have formalised an agreement for a pilot project to develop the country's vast shale reserves in the Vaca Muerta formation by July 2013. The deal will see YPF transfer a 50% stake in the Loma La Lata Norte and Loma Campana areas in the vast Vaca Muerta shale field in the province of Neuquen to Chevron in return for US$1.5bn of investment. The plan will involve the drilling of at least 100 wells in 2013/14.
Operational Data
Oil and gas liquids production:

26,000b/d (2011) 31,000b/d (2010) 33,000b/d (2009) 37,000b/d (2008)
Natural gas production:

0.04bcm (2011) 0.05bcm (2010) 0.27bcm (2009) 0.46bcm (2008) Chevron Argentina Peron 925 Piso 4 AAS Buenos Aires 1038 Argentina
Company Details
Tel: +54 (11) 4320 7400 Fax: +54 (11) 4463 0073
Page 52
Total
SWOT Analysis
Strengths
Substantial market share in electricity supply. Participation in gas infrastructure.
Production growth potential. Weaknesses
Modest upstream volumes. No refining or fuels marketing presence. High exposure to utility pricing issues Steady domestic and regional demand growth. Some exploration upside potential. Total plans to boost its current natural gas output to 4.2bcm from its offshore fields in southern Argentina.
Opportunities
Threats
State intervention in tariffs and taxation. Uncertain political and fiscal outlook. Potential for market to slow.
Company Overview
Total's exploration and production (E&P) activities in Argentina are carried out through its subsidiary Total Austral, which has assets in the Neuqun, Santa Cruz and Austral basins. Key producing assets include stakes in the Aguada Pichana (27.3% interest), San Roque (24.7%), Canadon Alfa (37.5%), Hidra (37.5%) and Argo (37.5%) oil and gas fields. The company's net local production averaged 14,000 barrels per day (b/d) of crude and 4.1bn cubic metres (bcm) of gas in 2011. Total is also Argentina's second largest producer of electricity, with capacity equivalent to 15% of the country's national grid and concentrated in metropolitan Buenos Aires and the south. Total Austral holds a 70% interest in the 1,400MW Piedra de Aguila hydroelectric power plant. Other
Page 53
shareholders include Petrobras Energa with a 9.19% interest. It also has a 63.93% stake in the Central Puerto power generator.
Strategy
European energy companies Total and Wintershall are expected to inject US$1.1bn and US$1bn respectively into boosting natural gas production in Argentina over the next five years to 2018, World Oil reports. Argentina's government says it expects the country's annual rate of natural gas output to increase by 3.1% between 2013 and 2017 as a result of the investment from the French and German majors. Argentina is currently seeking to rejuvenate its energy sector, after falling production and rising demand has turned it into a net importer in recent years. Total plans to boost its current natural gas output to 4.2bcm from its offshore fields in southern Argentina. In January 2011, Repsol and Total announced plans to step up shale gas exploration in Argentina's Neuqun Basin. Total announced that it had been awarded 42.5% operating interests in the Aguada de Castro and Pampa las Yeguas II licences as well a 40% non-operating interest in the Cerro las Minas licence and a 45% non-operating interest in the Cerro Partido licence. YPF will hold the remaining stakes and will operate the Cerro las Minas and Cerro Partido licences. Since the seizure of a controlling stake in YPF by the Argentine government from Repsol in April 2012, the status of all Repsol deals in Argentina is uncertain.
Market Position
E&P activities are carried out through its subsidiary Total Austral, which has assets in the Neuqun, Santa Cruz and Austral basins. Key producing assets include stakes in the Aguada Pichana (27.3% interest), San Roque (24.7%), Canadon Alfa (37.5%), Hidra (37.5%) and Argo (37.5%) oil and gas fields. The company's net local production averaged 14,000b/d of crude and 4.1bcm of gas in 2011. In Tierra del Fuego, the group notably operates the Carina and Aries offshore fields (37.5%). The award of the contracts to build the offshore facilities for the development of the Vega Pleyade gas and condensates field is scheduled for 2012/13. The project is scheduled to start production in 2014/15 and should make it possible to maintain the production operated by the group in Tierra del Fuego at around 17.41mn cubic metres (Mcm) per day. In the Neuqun Basin, Total started a drilling campaign in 2011 on its operated licences in order to assess their shale gas potential. The campaign, which started on the Aguada Pichana 1 (27.3%, operator) and San Roque (24.7%, operator) blocks, will be extended subsequently to the Rincon la Ceniza and La Escalonada licences acquired in 2010 (85%, operator) and to the four blocks acquired in 2011: Aguada de Castro (42.5%, operator), Pampa de las Yeguas II (42.5%, operator), Cerro Las Minas (40%) and Cerro Partido (45%). The connection of satellite discoveries on the edge of the main Aguada Pichana field, particularly in the Las Carceles canyons area, and the increase in compression capacity at San Roque, have extended plateau production of the mature fields in these two blocks.
Page 54
Total is also Argentina's second largest producer of electricity, with capacity equivalent to 15% of the country's national grid and concentrated in metropolitan Buenos Aires and the south. Total Austral holds a 70% interest in the 1,400MW Piedra de Aguila hydroelectric power plant. Other shareholders include Petrobras Energa with a 9.19% interest. It also has a 63.93% stake in the Central Puerto power generator. The group also has interests in a number of gas pipelines, including a 15.4% stake in Transportadora de Gas del Norte (TGN), which operates a gas distribution network covering the northern half of Argentina, a 32.7% interest in Transportadora de Gas del Mercosur (TGM), which operates a gas transport network connecting Argentina to southern Brazil and a 56.5% holding in the companies that own the GasAndes pipeline, which links the TGN network to the Neuqun Basin in Chile's Santiago del Chile region. Group unit TOTALGAZ is a major LPG distributor serving the commercial, industrial and residential sectors.
Operational Data
Year established: 1978 No. of employees: 450
Oil and gas liquids production:

14,000b/d (2011) 14,000b/d (2010) 15,000b/d (2009) 14,000b/d (2008)
Gas production:

4.1bcm (2011) 3.9bcm (2010) 3.8bcm (2009) 3.8bcm (2008)
Company Details
Total Austral Moreno 877 Piso 17 Capital Federal Buenos Aires 1091 Argentina
Tel: +54 (11) 4346 6400 Fax: +54 (11) 4346 6499
Page 55
ExxonMobil
SWOT Analysis
Strengths
Long history in refining and marketing.
Some gas production upside potential. Weaknesses
Insignificant contribution to group revenues. Weak upstream position. Steady growth in domestic energy demand. Modest investment requirement. Shale drilling potential. State intervention in tariffs and taxation. Uncertain political and fiscal outlook.
Opportunities
Threats
Company Overview
ExxonMobil's E&P assets comprise a 51% equity share of the Chihuidos block, which contains the Sierra Chata gas field in the Neuqun Basin, plus 23% of the Aguarague concession in the north west. The US firm's net daily production from these two fields is sold to consumers in Argentina and Chile. The company's former refining and marketing assets include the 86,000 barrel per day (b/d) Campana refinery. It also operated a network of service stations with an approximate 15% market share. Bridas Corporation, the oil company owned by China National Offshore Oil Corporation (CNOOC) and the Bulgheroni family, completed the purchase of the Campana refinery and 700-plus filling stations in Latin America in September 2012.
Strategy
Exxon's interest in the Argentine market has been reinvigorated with its push into the country's burgeoning Neuqun shale play. The company's Neuqun assets fit nicely in the Exxon's growing global unconventional resources portfolio and will likely be the focal point of its strategy in Argentina over the coming years. Beyond Neuqun, the company will likely hold on to its mature assets and may deploy its enhanced oil recovery technology to boost output.
Page 56
Market Position
Bridas Corporation, the oil company owned by CNOOC and the Bulgheroni family, in September 2012 completed the purchase of ExxonMobil's Campana refinery in Argentina and filling stations in South America. Bridas's subsidiary, Axion Energy, will control the assets acquired from Exxon, the company said in an e-mailed statement. The service stations are in Argentina (500), Paraguay and Uruguay (220 combined). Bridas will invest US$800mn in the next three years to increase gasoline production at the Campana refinery by 50% and diesel production by 60%. ExxonMobil has taken another step towards expanding its position in Argentina's burgeoning Neuqun shale play. The company has entered into a farm-in agreement with Argentina-focused independent Americas Petrogas that will see it take a 45% stake in four blocks and invest as much as US$76.3mn in initial exploration. Exxon and Americas Petrogas were to focus initially on exploring the Los Toldos 1 and 2 blocks, where an initial three-well drilling campaign in 2010 showed signs of gas and light oil, potentially as part of the same Vaca Muerta formation in which YPF's Argentine unit recorded two major shale oil and gas discoveries. The deal marks Exxon's second acquisition in the Neuqun Basin. The company made its first move into the region in late-December 2010 when it joined forces with YPF to explore for unconventional gas in the Loma del Molle and Pampa de las Yeguas I blocks. Drilling at both the YPF and Americas Petrogas projects was expected to get under way in Q411.
Operational Data
Gas production: 0.7bcm (2007) Refining capacity: 86,000b/d (2008) Esso Petrolera Argentina SRL Carlos Maria Della Paolera 297/299 Capital Federal Buenos Aires C1001ADA Argentina
Company Details
Tel: +54 (11) 4319 1400 Fax: +54 (11) 4319 1227 www.exxonmobil.com
Page 57
Royal Dutch Shell

SWOT Analysis
Strengths
Long history in refining and marketing. Some production upside potential. Insignificant contribution to group revenues. Weak upstream position. Steady growth in domestic energy demand. Modest investment requirement. State intervention in tariffs and taxation. Uncertain political and fiscal outlook.
Weaknesses
Opportunities
Threats
Company Overview
Argentina is not a major area for Shell's exploration and production (E&P) unit, but it holds a much stronger position in the refining and marketing sector. The Buenos Aires office serves as the group's Latin American headquarters for Shell Oil Products. Shell has a 22.5% interest in the Acambuco gas field (together with PAE) and a 51.25% interest in the Valle Morado exploration licence (together with CGC). Shell's key downstream assets include the 100,000b/d Refinera Buenos Aires refining facility. Retail fuels marketing is carried out through a network of 1,025 service stations, translating into an approximate 23% market share. Lubricants are produced at the Planta Sola lubes-blending plant. There is a clash between Shell's long history and large presence in Argentina, and its changing international strategy of 'more upstream, profitable downstream'. It is possible that Shell will begin divesting established but non-profitable businesses in Argentina before too long. Calls by former president Nestor Kirchner for the removal of Shell from Argentina cannot have helped the group's position, or enthusiasm for Argentine investments. Shell is facing an uphill struggle to overturn Argentine government influence over the price of oil products. Although the government has been loath directly to ban products that break Argentina's artificially low price ceiling, it could bring significant pressure to
Strategy
Page 58
bear on Shell or other retailers if they increase prices. President Kirchner's administration managed to keep the market for gasoline about 50% below international prices through a policy of persuading manufacturers to freeze their prices. Shell in December 2011 agreed to partner with Argentina's Medanito on a shale oil and natural gas project in south-western Argentina, with plans to invest at least US$200mn over the next five years. The exploration and production activities will be carried out in the Aguila Mora and Sierras Blancas blocks in the Neuquen Basin for both conventional and unconventional oil and gas.
Market Position
Argentina is not a major area for Shell's E&P unit, but it holds a much stronger position in the refining and marketing sector. The Buenos Aires office serves as the group's Latin American headquarters for Shell Oil Products. Shell has a 22.5% interest in the Acambuco gas field (together with PAE) and a 51.25% interest in the Valle Morado exploration licence (together with CGC). Shell's key downstream assets include the 100,000b/d Refinera Buenos Aires refining facility. Retail fuels marketing is carried out through a network of 1,025 service stations, translating into an approximate 23% market share. Lubricants are produced at the Planta Sola lubes-blending plant.
Operational Data Company Details
Refining capacity: 100,000b/d (2010) Shell Compaa Argentina de Petrleo SA (CAPSA) Avenida President Roque Saenz Pena 788 Capital Federal Buenos Aires 1383 Argentina
Tel: +54 (11) 4328 0333/0444 Fax: +54 (11) 4130 2324
Page 59
Apache Energy
SWOT Analysis
Strengths Weaknesses
Upstream assets. Weak gas prices. High capex requirement. Gas Plus price premium. Liberalisation of gas pricing after the elections. Further populist measures. Growing regasified gas imports from neighbours. Bolivian gas.
Opportunities
Threats
Company Overview
Apache Energy acquired the Argentine interests of fellow US oil firm Pioneer in a US $675mn deal in Q206. Through the deal, Apache gained estimated proven reserves of 22mn barrels (bbl) of oil/liquids and 8.4bn cubic metres (bcm) of natural gas. In Q306, the company acquired further operating interests in seven concessions in the Tierra del Fuego province from PAE for US$429mn.
Strategy
Apache continues to evaluate the use of horizontal drilling techniques on tight and unconventional gas resources in the pre-Cuyo and Vaca Muerta formations of the Neuqun basin (these formations receive the benefit of higher gas prices under the Gas Plus programme). Apache is planning at least US$4bn of non-core asset sales that many observers think will include the Argentina portfolio. Asked whether investors should think about Argentina being in Apache's portfolio for the long term, its management said that the country is troubled politically, which puts a question mark over its long-term fit in the exploration company's portfolio. However, securing the right price may be a challenge unless national oil companies make strategic bids for the business.
Page 60
Market Position
Apache has had a continuous presence in Argentina since 2001, which was expanded substantially by two acquisitions in 2006. It currently has operations in the Provinces of Neuqun, Rio Negro, Tierra del Fuego and Mendoza. Apache has interests in 34 concessions, exploration permits and other interests totalling 3.7mn gross acres in four of the main Argentine hydrocarbon basins: Neuqun, Austral, Cuyo, and Noroeste. The concessions have varying expiration dates ranging from three years to over 15 years remaining, subject to potential extensions. Fourth-quarter 2012 production in Argentina was 46,946 barrels of oil equivalent per day (boe/d), down 3% quarter-on-quarter, due to natural production decline. During the quarter, the region averaged two rigs and drilled five net wells. Apache focused on new recompletions in the Neuqun basin (Lajas, Quintuco and Centenario reservoirs) and increased lift capacity jobs in several fields in both Austral and Neuqun basins. Under the Gas Plus programme of the Neuqun Basin, two wells at Estacin Fernndez Oro (EFO) reached total depth and were initially completed delivering a combined gross rate of 147 thousand cubic metres per day (mcm) and 555 barrels per day (b/d) in the fourth quarter of 2012. Apache continues to evaluate the use of horizontal drilling techniques on tight and unconventional gas resources in the pre-Cuyo and Vaca Muerta formations of the Neuqun basin (these formations receive the benefit of higher gas prices under the Gas Plus programme). During the same quarter, Apache drilled three exploration wells and participated in two non-operating wells targeting Vaca Muerta shale oil and wet gas trends. Apache holds approximately 1.3mn net acres in the Vaca Muerta shale window, of which 586,000 net acres are in the oil window of the play.
Financial Data
Group net revenue

US$17.08bn (2012) US$16.89bn (2011) US$12.09bn (2010)
Group net income/(loss)

US$2.00bn (2012) $4.58bn (2011) US$3.03bn (2010)
Operational Data
Oil/Gas liquids production
12,749b/d (2012)
Page 61
Gas production
2.21bcm (2012) Apache Energia Tucuman 1 - 12th Floor Buenos Aires C1049AAA Argentina
Company Details
Tel: +54 (11) 4335-5200 Fax: +54 (11) 4335-5201 www.apachecorp.com
Page 62
Other Companies - Summary

Sinopec
China's state-run Sinopec agreed in December 2010 to buy Occidental Petroleum's assets in Argentina for US$2.45bn. Oxy had acquired Vintage Petroleum's production assets in Argentina in 2006. It has shares in 23 concessions located mainly in the San Jorge Basin as well as in the Cuyo and Neuqun basins. It is the operator with a 100% stake in 20 of the concessions.
Bridas/pae
Pan American Energy (PAE) is a company dedicated to oil and natural gas E&P activities in the Southern Cone and it is the second largest producer of hydrocarbons in Argentina. It is 100% owned by Bridas Corporation, a 50:50 JV between Bridas Energy Holdings Limited (BEH) and CNOOC. Bridas and CNOOC filed a lawsuit against Repsol on January 3 2012 in order to prevent the Spanish company from blocking a US$1.5bn shale gas project with YPF. On December 28 2012, YPF and Bridas agreed to invest US$1.5bn in developing shale oil reserves in Patagonia, with the partnership planning to drill 130 wells. Bridas has pledged to offer up to US$500mn in financing for YPF, to be repaid in 10 years, according to the documents in the lawsuit. PAE has agreed to invest US$3.4bn in the country's natural gas sector between 2013 and 2017, World Oil reports. The deal, signed with the Argentine government, will boost domestic exploration and allow Pan American to charge prices above the current base level of US$7.50 per million British thermal unit in return. State-owned rival YPF has a similar agreement in place.
Americas Petrogas
Americas Petrogas has announced the discovery of new light oil with its LHo.x-1 well on Totoral Block offshore Argentina. The LHo.x-1 well established oil production potential from the Vaca Muerta shale play in the Picun Leufu sub-basin. The basin extends over the company's Totoral, Yerba Buena and Bajada Colorada blocks. LHo.x-1 has been closed for a pressure build-up test, after which the company will perform a test to determine the fluid contribution of each interval that was hydraulically stimulated. Americas Petrogas has made a new shale gas discovery in Argentina, World Oil reports. Part of the onshore Vaca Muerta site, the new find was made when Americas hydraulically fractured (fracked) the Los Toldos I block, producing 90.6 cubic metres of natural gas during initial testing. Americas Petrogas has discovered new reserves of gas and natural gas liquids (NGLs) at its Aguada Los Loros vertical well in central Argentina, Oil Voice reports. The well, ALL.x-1, is part of the Los Toldos I block, which covers 398sq km of land. Americas Petrogas intersected the Vaca Muerta shale formation at 562 metres (m) in late 2012 before carrying out hydraulic stimulaton at four pressure points in early 2013. Initial
Page 63
production at depths between 2,570m and 2,929m is currently at 3.2mn cubic metres of gas per day (Mcm/d) and 9-18 barrels per day (b/d) of oil.
Others
Germany's Wintershall is looking for partners to develop its CN-V block in Argentina's Neuquen province following a hike in natural gas prices. Wintershall intends to sell a stake in CN-V block to divide investment costs, reports Bloomberg, citing Jurgen Schuster, vice-president for ventures. The government had increased prices of natural gas at the well to US$7.50 per million British thermal units in November 2012 in a bid to attract investment. Wintershall also expects to start production at its Vega Pleyade field by 2016. Britain's BG Group has agreed the sale of its direct and indirect participation in troubled Argentine natural gas distributor Metrogas. BG will sell its 54.7% stake in Gas Argentino - the holding company that controls Metrogas - as well as a 7% direct stake in the gas distributor to Integra Gas Distribution for an undisclosed sum. '(BG) is leaving its Argentine business,' a Metrogas spokesman said, adding that he did not have any information about Integra Gas Distribution. Metrogas, which distributes natural gas to about 2mn customers in and around the capital Buenos Aires, has been suffering financial problems due to a tariff freeze imposed a decade ago at the height of a sharp economic crisis. In September, it said it was struggling to pay providers because of the tariff freeze. Uruguay's Ancap has become the latest company to seek a slice of Argentina's unconventional oil and gas potential, with the Vaca Muerta formation estimated to contain the world's third largest shale reserves, according to the US Energy Information Agency (EIA). During recent negotiations with Argentina's YPF, Ancap expressed interest in jointly producing oil and gas, although details regarding the scope of investment have not yet been made public. President Energy is looking to revive production at the Puesto Guardian concession in north-west Argentina. Its efforts are currently focused on a three-well workover campaign across the Pozo Escondido and Dos Puntitas fields, where it will employ hydraulic fracturing (fracking) techniques in order to stimulate production. Indeed, Puesto Guardian was first discovered in 1937 and has registered sharp declines in production since peaking at 9,000b/d in the 1980s - with two of the wells currently targeted by President having been shut-in for two decades. Current gross production has fallen to approximately 450b/d. President Energy's three-well campaign will focus on wells PE7 and PE8 at the Pozo Escondido field and the DP1001 well at the Dos Puntitas field. The two fields at Pozo Escondido have been shut-in for 20 years, but President anticipates they hold significant untapped potential, largely on the back of a 215% increase in stock tank oil initially in place (STOIIP). STOIIP is now estimated to be 63mn barrels (bbl), up from 20mn barrels (bbl). The Dos Puntitas field has 15mn bbl of STOIIP, with further upside potential. Dos Puntitas is currently producing approximately 80b/d. President expects
Page 64
the combination of the workover programme and fracking technologies to support a rise in production. Madalena Ventures has revealed the results of an evaluation of unconventional shale resources on its three land blocks in Argentina's Neuquen basin. Performed by Ryder Scott Petroleum Consultants, the report focused on the Vaca Muerta shale, Lower Agrio shale and Basal Quintuco. The results showed best case P50 discovered petroleum initially in place (PIIP) of 257.4mn barrels of oil equivalent (boe), with best case P50 undiscovered PIIP of 34.6bn boe. Meanwhile, best case P50 contingent recoverable resources were 19.4mn boe, with best case P50 prospective recoverable of 2.8bn boe.
Page 65
Regional Overview
Latin America Overview
BMI View: Latin America is set to be the fastest-growing region in terms of oil production over the next decade. However, evolving opportunities and risks in some of the region's largest producers make for a bumpy road to growth over the short-to-medium term. The next several quarters are full of opportunities for Brazil, Peru and Colombia, with new licensing rounds and rising foreign investment generating growing optimism. Among the risks is the trajectory of political transition in Venezuela, a deteriorating macroeconomic environment in Argentina, and mounting scepticism of reform in Mexico.
We are forecasting strong oil and natural gas production growth in Latin America through 2016. Brazil's offshore subsalt oil province and Venezuela's Orinoco heavy oil belt will be at the forefront of the surge in oil production, leading to an increasingly large export capacity for the region. Indeed, growing opportunities in Brazil, Colombia and Peru underscore this potential. Yet some acute risk factors could limit the realisation of such significant potential in the short-to-medium term, particularly for some of the region's largest markets, including Venezuela, Mexico and Argentina.
Forecasting Regional Growth

Share Of Latin American Oil Production By Country, 2012 & 2018f
Page 66
As for natural gas, we forecast that demand will outpace production growth, leading to a rise in the volumes of natural gas being imported into the region. This view of a regional gas deficit will remain in place until we begin to see credible commitments to developing the region's shale gas resources, particularly in Argentina, which has the potential to be a regional gas powerhouse should its development be successful. At the moment, however, we cautionagainst over-excitement on the back of weak macroeconomics and largely unsupportive government policies towards the energy sector.
Increased Oil Export Capacity, Gas Import Dependency

Latin America Oil & Gas Production & Consumption, 2002-2021 ('000b/d & bcm) 20,000 400
300 10,000 200
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f Latin America Oil Production, 000b/d (LHS) Latin America Oil Consumption, 000b/d (LHS) Latin America Gas Production, bcm (RHS) Latin America Gas Consumption, bcm (RHS)
100
Key Themes In Latin America's Oil & Gas Sector:
It is tempting for markets and industry players alike to imagine a brighter future for the post-Hugo Chvez energy sector in Venezuela. Indeed, the country's unparalleled below-ground potential has disappointed in recent years due to economic mismanagement, underinvestment and the unsustainable social policies which have drained state-owned PdVSA of critical resources. However, our core view is one of policy continuity, as we expect acting president Nicols Maduro to win the upcoming election on the back of a commitment to Chavismo policies, therefore reducing the prospect for reform of the energy sector and the broader economy in the short term. Our Country Risk team is forecasting a 'perfect storm' in Argentina in 2013, which includes a sizeable devaluation of the country's exchange rate. Similarly, deepening political challenges for President Cristina Fernndez de Kirchner could pave the way for more erratic policymaking and reduce the
Page 67
predictability of Argentina's government. Such political volatility in a country prone to interference in its strategic sectors, as well as a broad worsening of an already strained economic environment, does not bode well for the Argentine energy sector. The recently-nationalised YPF is desperate for foreign partners and capital in order to monetise the country's shale resources. Although some partners have emerged in recent months - Chevron being the most significant partner at the time of writing - such a 'perfect storm' could deter them from providing the much-needed foreign investment into the country's energy sector. Indeed, Chevron's plans for the country's shale potential are being thwarted by the country's legal system, providing yet another barrier to investment. As such, we are currently holding on to our forecasts.
Betting On Shale
Argentine Proven Gas Reserves & Production, 2002-2021 (bcm) 1,000 50
45 500 40
Before entering office, Mexican President Enrique Pea Nieto made the liberalisation of state-owned oil monopoly Petroleos Mexicanos (Pemex) a 'signature issue' of his election campaign. Yet the reform outlook is looking less rosy since he took office. Although Pea Nieto is placing energy sector liberalisation high on the agenda, the political barriers increasingly look too resilient to make the largescale reform that the sector needs. As such, it is likely that only some liberalisation will occur. This would fall short of what is needed for comprehensive reform, while disappointing those investors betting on a rapidly improving Mexican production outlook.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f Proven gas reserves, bcm (LHS) Gas production, bcm (RHS)
35
Page 68
Banking On Reforms For A Production Trend Reversal

Mexican Oil Production & Net Exports, 2001-2022 ('000b/d) 20,000 400
300 10,000 200
We remain firmly bullish on the long-term outlook for the Brazilian energy sector, with production from the country's sub-salt reserves pushing production to new highs. The 11th Licensing Round, to be held later this year, also presents strong upside risks, although at this point, any new production from these new blocks may fall outside the scope of our 10-year forecast period. The short-term outlook is more mixed, however, as ongoing regulatory challenges provide reason for some caution. Of these, a flare up in the ongoing battle for a new Oil Royalty Law underscores the highly politicized nature of Brazil's regulatory environment. This remains particularly true as local content requirements and strict labour laws are raising production costs and pose a growing deterrent to doing business in Brazil. There have been some positive developments for state-owned Petrobras, however, as government-controlled fuel prices have been hiked substantially since June 2012, helping to relieve the immense financial pressures on the company.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f Latin America oil production, 000b/d (LHS) Latin America oil consumption, 000b/d (LHS) Latin America gas production, bcm (RHS) Latin America gas consumption, bcm (RHS)
100
Page 69
A Steady Climb
Brazil's Proven Oil Reserves & Production, 2002-2021 (bn bbl & '000b/d) 30
7,500
20
5,000
10
2,500
Bolivia's natural gas reserves base is in decline, despite our forecasts for production to increase 22% through 2016. The longer-term prospects for Bolivia as a major regional gas supplier are therefore contingent upon new and successful gas exploration. Attracting that type of investment will be difficult, however. Increased nationalism across the country's strategic sectors, including electricity generation and mining, is causing a deterioration in Bolivia's business environment and the downside risks in the sector are substantial.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f Proven oil reserves, bn barrels (LHS) Oil production, 000b/d (RHS)
Page 70
Running Out Of Steam

Bolivian Proven Gas Reserves and Production, 2002-2021 (bcm) 1,000 30
20 500 10
We have been highlighting the important privatisation trend underway in Peru, where state-owned Petroper has plans to resume production in collaboration with private partners. The timing is right for the state-owned company to regain a slice of domestic oil and gas production, as we forecast both will rise rapidly over the next several years, and remain elevated through to the end of our forecast period in 2022. The underexplored nature of the energy sector, combined with an increasingly attractive business environment for foreign investment, creates further upside risks to our forecasts. It also supports our view that Peru will remain one of the most dynamic economies in Latin America over the forecast period. Indeed, Peru has just surpassed Brazil in BMI's Upstream Risk/Reward Ratings to be the highest scoring country in the region in terms of Upstream Rewards (see our online service, March 14 2013, 'Racing To The Top, And Bottom'). However, downside risks do exist, particularly in the form of a return to leftist government policies, as well as active militant groups that continue to target the country's energy infrastructure. Indeed, recent attacks have been carried out by the Shining Path group, targeting natural gas assets.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f Proven gas reserves, bcm (LHS) Gas production, bcm (RHS)
Page 71
Export Potential Within Reach

Peruvian Oil Production & Exports, 2002-2022 ('000b/d) 20,000 400
300 10,000 200
Strong regional economic growth will see demand for oil rise rapidly over the coming years, and we forecast that regional consumption will rise by 13% between 2011 and 2016. Brazil and Trinidad and Tobago will each record the largest percentage increase in oil demand over the forecast period, registering 25% and 22% rises in oil consumption, respectively. Regional refining capacity is forecast to rise alongside consumption, with Brazil and Venezuela to remain the two countries with the largest overall capacity. Brazil will also undergo the largest refinery capacity expansion over the forecast period, with an anticipated 50% increase. We also expect Peru and Venezuela to increase their refining capacities by 20% and 6%, respectively. The development of refining projects will be dominated by state-run companies. The Latin American gas market will be divided sharply: surging demand in the Southern Cone countries will exacerbate their import requirements, while the northern countries will further realise their growing export potential - particularly Trinidad and Tobago, the region's largest LNG exporter (although not without significant degradation of its reserves base), and Peru. Indeed, Peru's natural gas outlook has improved significantly, with production forecast to increase by 73% between 2011 and 2016. The region's most important pipeline trade will continue to be between Bolivia and its southern neighbours, Brazil and Argentina.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 2021f Latin America oil production, 000b/d (LHS) Latin America oil consumption, 000b/d (LHS) Latin America gas production, bcm (RHS) Latin America gas consumption, bcm (RHS)
100
Page 72
Global Industry Overview

Global Energy Market Overview
The fundamentals are pointing to a well-supplied global oil market for 2013, with big gains forecast for Iraq (circa 350,000 barrels per day - b/d - our expectations adjusted lower than previous quarters), the US (circa 800,000b/d - our expectations adjusted higher than the previous quarter), as well as the Sudans, Nigeria and Angola, and smaller producers such as Colombia, Peru and Ghana.
There are 'low-hanging fruit' that will bolster the supply picture for 2013, such as the ramp-up in Iraqi production (albeit with more downside risks due to infrastructure constraints), the resumption of volumes from South Sudan and the continuous ramp-up of US production, as well as delayed fields in Ghana coming online. Technical risks are always part of the picture and could cause delays (and therefore a downside risk to production forecasts), especially in markets like Iraq and the Sudans, where the ramp-up is precarious and predicated on a sensitive political balance in both cases. The US, however, will do a lot to bolster growth on the production front.
Over the longer term, production growth globally could moderate as costs continue to escalate along with the technical challenges inherent in new large-scale developments. Russia is a prime example, where we see production hitting new peaks each year to 2015/2016, though this momentum will fade as natural decline rates take over and new fields are more difficult and costly to develop. Our global production forecasts reflect a moderation in production growth from 2017 and beyond, although potential discoveries generate strong upside risk to this forecast.
A raft of downward revisions from the major agencies (IEA, EIA and OPEC) at time of writing is (April 2013) indicative of the scepticism with regards to strength of global demand in 2013, which has also prompted a sell-off in the oil markets.
The EIA revised China's 2011 oil consumption data down by 900,000b/d, prompting us to change our China data series, and consequently our historical data pertaining to the global supply and demand balance. Nonetheless, there has been no structural change to the market dynamics depicted by our chart below, which shows a global deficit turning into a surplus in the coming years.
This outlook also underpins our oil price forecast for the year, which sees the market pricing in a lower average Brent price compared to 2012, but firmly above the US$100 per barrel (bbl) mark.
Page 73
Oil Fundamentals: Getting Comfortable

Theoretical Supply & Demand Balance In The Global Oil Market, 2007-2015 ('000b/d)
2012 = BMI estimate; 2013-2015 = BMI forecast. Source: EIA, BMI
Table: BMI's Oil Price Forecasts & Bloomberg Analyst Consensus, Average Price (US$/bbl)
2012 WTI, US$/bbl - BMI Brent, US$/bbl - BMI Brent-WTI Spread - BMI 93.30 111.70 18.40
2013f 93.50 110.00 16.50
2014f 91.00 105.00 14.00
2015f 91.00 102.5 12.5
WTI, US$/bbl - Bloomberg Consensus Brent, US$/bbl - Bloomberg Consensus Brent-WTI Spread, US$/bbl - Bloomberg Consensus
95 110.70 15.7
98 110 12
105 110 5
f = forecast. Source: Bloomberg, BMI
Page 74
The theoretical surplus between supply and demand in the global oil market will grow over the coming years, precipitating a decline in the price of oil. In early March 2013 we revised up our Brent oil price outlook to better reflect the equilibrium in the global oil market. We forecast Brent to average US$110/ barrel (bbl) in 2013, falling from an average of nearly US$112/bbl in 2012. WTI is expected to average US $93.5/bbl in 2013.
We have priced-in big gains in supply in 2013:
In Brazil, the Aruana, Guara and Papa Terra subsalt fields are planned to enter production in 2013, ramping up output further in 2014. We forecast total Brazilian oil production rising from 2.88mn b/d in 2012 to 3.0mn b/d in 2013 and a surge (as delayed projects come online) in 2014 to 3.4mn b/d. We have raised our production forecasts for South Sudan - on the condition that the agreement with Sudan holds - and expect a rise in production of 54,000b/d in 2013 and a big leap of 218,000 b/d in 2014. Floods and other problems that reduced Nigerian volumes in 2012 are expected to be resolved in 2013, though we cannot rule out further disruptions to the country's oil supply, including from rampant bunkering and attacks on infrastructure. Colombia, Peru and Ghana are also expected to register strong output gains in 2013, adding a combined 180,000b/d to the global market - the rise will be led by Colombia. The US will register the largest supply gain globally, with an additional 800,000b/d of crude oil going into the market in 2013 (1mn b/d if we include NGL and Other Liquids productionin the crude figure), according to our recently upwardly revised forecasts.
These additions will make up for the continued loss of supply from Iran. We have once again downgraded our forecasts for production as negotiations over Iran's nuclear programme and the sanctions rumble on. We forecast that Iranian oil production will decline a further 17% in 2013 to 2.6mn b/d. This is 1.6mn b/d less than in 2010.
Page 75
Net Balance Positive

2013f Production Gains/Losses by Region, % change y-o-y
f=forecast. Source: BMI
Compared to our last Global Oil update, we have turned more bearish on Venezuela: from a previous forecast suggesting a gain of 300,000b/d for 2013, we now expect a smaller gain of 120,000b/d. We are also looking at a more sombre picture for Angolan production in 2013, compared to our previous expectations. On paper, there are about 530,000b/d due to come online, but realistically we estimate that, following various project delays, the increase will be approximately half of the expected volume.
Page 76
Growth From Frontiers While US Maintains Momentum In 2013

Gains In Oil Production In 2013 Compared To 2012 % change y-o-y (top) / Gains In Oil Production In 2013 - Addition/Loss to 2012, '000s b/d (bottom)
Source: BMI
However, in terms of growth trends in oil production, we still expect the same patterns to emerge. Specifically:
High (albeit volatile) 2013 oil prices will continue to incentivise production and we anticipate strong growth, especially from non-OPEC suppliers in the Americas; Saudi Arabia and the US will be the two markets to watch over the coming quarters, with the latter continuously surprising to the upside, while Saudi's status as a swing producer makes the country the main determinant of global spare capacity.
Page 77
In terms of crude oil and liquids daily production, we do not see the US overtaking Saudi Arabia within our forecast period; nonetheless such a trend is clearly showing, which could make the US the world's largest crude and liquids producer the following decade.
Saudi Arabia Stays Marginally In The Lead

Crude Oil, NGLs & Other Liquids Production Forecasts ('000b/d)
Note: These figures do not depict our "Total Oil Production" forecasts, which also include Refinery Gains. 2012= BMI estimate, 2013-2021=BMI forecast. Source: BMI
OPEC policy changes remain uncertain as the cartel seems to be in an uneasy equilibrium at the moment. Saudi Arabia has several conflicting factors to consider, from the challenge posed by US oil production, to providing a floor to prices and keeping more hawkish OPEC calls on production at bay.
In the latest OPEC meeting, the members decided to keep the quota for crude oil production at around 30mn b/d. Our forecasts suggest that total OPEC oil production will be 38mn b/d in 2013. That factors in our expectations that members will produce crude oil above their quotas, but it also includes natural gas liquids (NGLs) and other liquids production, as well as refinery gains (consistent with EIA data methodology), in contrast to a more strict 'crude-only' categorisation from OPEC for oil production.
Page 78
Iraq will primarily fuel oil production growth amongst OPEC producers, and make up for the falls that we have factored-in for Saudi Arabian production in 2013. We forecast that Saudi Arabian crude oil production for 2013 will be 9.7mn b/d, down from an estimated 9.8mn in 2012.
Iraq Fuels Production Growth

OPEC Production Forecasts, 2010-2021 ('000b/d & % chg y-o-y)
On the non-OPEC front, we see total production in 2013 reaching 54.5mn b/d in 2013, up from an estimated 52.5mn b/d in 2012. Our production forecast (which includes crude, lease condensate, NGLs, other liquids and refinery gains - consistent with EIA methodology) is now (following upward revisions for the USA primarily and the Sudans) in line with the IEA's, which sees non-OPEC production in 2013 reaching 54.4mn b/d in 2013. According to OPEC's April 2013 Monthly Oil Market Report, non-OPEC oil supply for 2013 is more bearish at 53.9mn b/d.
While there is scope for delays with projects, as well as political and security risks taking a toll on global production capacity, the greatest addition of new daily volumes is going to come from the US , where we forecast total oil production to reach 12.2mn b/d. With oil prices forecast to remain supportive for crude and liquids production, the outlook for US upstream is strong.
Page 79
Russia will be the second largest oil producer, though we see its production growth stagnating and eventually beginning to decline. We reiterate several factors that underpin our current outlook on Russia, such as resources located in more remote areas and of a more technically-challenging nature, a lack of fresh capital for the massive capital expenditure (capex) required to develop them and inadequate infrastructure. Political risk, stemming from heavy-handed state involvement and regulatory uncertainty, could also keep private commitments at bay. The realisation of Russia's oil and gas potential thus lies in unlocking the political gridlock that has prevented much needed reforms from taking place.
Still Growing In 2013

Total Non-OPEC and OPEC Production Forecast, 2000-2020 ('000b/d)
e/f = forecast. Source: EIA, BMI
Looking on the demand side, we saw last quarter a significant downgrade in our historical dataseries for China. The EIA had previously overestimated Chinese oil consumption in 2011, and a revision by the agency saw this figure downgraded by 900,000b/d. This also had a knock-on effect in our 2012 data for China, as well as for global consumption for the year. For 2013 we forecast a rise in global oil consumption of 1.8%, based on an assumption of global GDP growth of 2.9%.
Page 80
Along The Same Lines

Global GDP Real Growth Forecasts, 2012-2014 (% chg y-o-y)
2013, 2014 = BMI forecasts. Source: BMI
Table: Global Oil Demand Forecasts
2013 Demand IEA OPEC EIA BMI 90.6 89.7 90.0 89.6
2012 Demand 89.8 88.9 89 88
% change y-o-y 0.9 0.9 1.1 1.8
2013 GDP Growth % Assumption 3.5 3.2 na 2.9
* Oil consumption definitions may vary between agencies. BMI Definition: Consumption of finished petroleum products. Source: BMI, EIA, OPEC, IEA
We are more bullish in our demand growth forecasts than other major agencies. We attribute this to the fact that in some of the largest consumers in the world - such as China, India, Brazil and other large emerging markets - large subsidies are still in place that are artificially boosting demand. While across emerging markets price reform is taking place, we still price-in healthy levels of demand for products such as gasoline
Page 81
and diesel. Africa and Latin America will register the highest growth in consumption in 2013, 3.3% and 3.2% respectively, with Western Europe and North America lagging behind at 0% and 0.4% respectively.
Looking at the longer-term trends in consumption, emerging markets will unsurprisingly lead in terms of the biggest gains in consumption growth. According to our forecasts, Brazil's per capital oil consumption will be 45% higher in 2021 compared to 2013, the largest increase amongst large consumers. Energy efficiency gains will mean a lower rate of growth in oil consumption in developed economies, whose consumption of oil per capita is going to be lower in 2021 compared to 2013. Markets where we see a small increase in oil consumption to the end of our forecast period, but a population decline (Japan and Germany) will see a rise in per capital oil consumption, symptomatic though of their population 'time-bomb' rather than any major structural divergences in energy consumption patterns from their peers.
BRICs Leading The Surge In Consumption

% Change In Per Capita Oil Consumption, 2013-2021
Based on 2013 and 2021 BMI oil consumption and population forecasts. Source: BMI
Page 82
Industry Trend Analysis

BMI View: The Extractive Industry Transparency Initiative (EITI) has gained a lot of prominence over the last year, with the US adopting similar standards in September 2012, and the EU reaching agreement on EITI implementation in April 2013. While incomplete, with the initiative providing no guidance pertaining to the allocation of exploration rights, EITI constitutes a strong basis that will guarantee stronger and fairer competition in the hydrocarbons markets of the countries that take up implementation. We believe these recent developments will foster a trend towards greater transparency in the oil & gas industry.
The EITI is a non-governmental institution, established in October 2002 by former UK Prime Minister Tony Blair, and headquartered in Oslo. Including the United States, 20 countries and 70 companies involved in mining, timber and oil and gas extraction are part of the organisation.
The purpose of the EITI is to ensure that revenues from the extracting industry are correctly redirected towards the greater good of the population. This occurs through increased transparency in transfers between companies and the government; this increase in transparency aims to reduce corruption, which is especially pertinent in the extractive industries space.
A certain number of requirements need to be met for a country to be declared EITI compliant.
The first requires the government of a given country to formally announce its intention to implement EITI, along with a commitment to working with civil society groups and extracting companies. This inception phase also requires public authorities to set-up institutions devoted to the implementation of EITI. This includes the creation of a multi-stakeholder group in charge of overseeing the implementation and composed of representatives of civil society, companies and public authorities. The second phase constitutes the most critical, as it requires the country to implement EITI's standards. Most notably, this includes the regular reporting of transfers to the government and public entities by all companies operating in extractive sectors in the country. These transfers should be independently audited. Meanwhile, the government must report that it has received these notifications from the companies. These reports should be disclosed to the public and payments are normally disaggregated by revenue stream, often by company. Finally, the country must ensure that it maintains the reporting and disclosure requirements in order to continue to be considered a compliant country.
Our view is that the impact of EITI is positive in two respects:
Increased transparency, along with compulsory auditing of reporting, is reducing the scope for corruption. This should improve the economic picture of the country as less revenue from the extractive industry will be redirected toward private interests that perpetuated rent-seeking behaviour and patronage networks. This will improve the business environment for investors, which will have to face fewer corruption-related charges.
Page 83
Public disclosure of revenues and transfers will allow communities to know exactly how much revenue is generated from the oil and gas industries. This, along with involvement of civil society in the multistakeholder groups may stir debate and ensure better use of natural resource revenues in pursuit of a more positive economic picture. EITI is a strong signal to investors that the government is promoting fair competition. This should incentivise international oil companies to increase activity in EITI countries.
The adoption of transparency standards, and intention to join EITI from the US (under the banner of the Dodd-Frank Act) and the European Union are the strongest endorsements of the initiative to date and we believe are a strong signal to the industry and governments on greater transparency in the industry. There are however limitations by what extent the EITI will be able to pierce the opaque veil that exists in several markets, especially governing the tender and licensing rounds phase.
It has no transparency requirements, nor does it introduce standard procedure, for the allocation of exploration and production rights. Consequently, it does not put in place controls to stop potential abuses taking place throughout the bidding system. EITI only concerns companies operating in a given country; it does not require the monitoring of transfers from the international subsidiaries of a company to the government, therefore allowing some scope for bribery in an international context. Countries however always have the possibility to implement more stringent requirements. Reporting, even following auditing, leaves scope for irregular and unreported money transfers, in particular from individual to individual.
Finally, EITI reporting usually does not include payments made in kind, leaving once again, additional scope for corruption.
Growing Implementation Base

There are currently 20 countries complying with EITI and 17 candidate countries. The majority of them are Sub-Saharan African (SSA) nations, which have been fighting corruption for several years, not only in the O&G industry but also in the mineral extraction sectors.
Page 84
EITI Belt
EITI Countries & Respective Status
Source: EITI, BMI
Several statistical studies have shown that adoption of EITI standards could increase investment in a country's extractive industry. However, even in Africa, several of the main oil and gas producers remain indifferent to EITI. For instance, none of the North African producers have formulated any intention of joining the group, neither has Angola.
We see two mains reasons for this trend. Firstly, countries with proven large below-ground potential can find other ways to influence investors and prompt them to take an interest in their hydrocarbons sectors. Secondly, announcing the intention to join EITI could impair investor sentiment, as it signals the given country is subject to corruption.
Page 85
Developed Drive
We believe that, while it is already growing fast, EITI's progressive implementation will accelerate in the coming years. The main reason for this is the recent drive by developed countries to implement the standards. Hosting the committee, Norway has been compliant with EITI standards since 2011, and is so far the only major developed country formally applying the standards. However, since 2012, the US, Australia and the European Union have taken steps toward the implementation of EITI or equivalent rules.
Australia launched an EITI pilot project in October 2011. Thus far, the country has set up the required institutions including a multi-stakeholder group, although it has not formally entered the candidacy process. However, so far, the project only involves eight companies out of the 4,000 extraction-oriented firms in the country.
The US has expressed its intention to join EITI in 2012, along with an amendment of the Security Exchange Act of 1934. The amendment creates a new section under the act entitled 'Disclosure for Payment by Resource Extraction Issuers'. This will require country-by-country and project-by-project disclosure of revenues and payments made by US companies to all governments and government entities. These new reporting requirements will affect US-listed companies, both domestic and foreign, and will apply to subsidiaries or other controlled entities belonging to companies operating in the extraction industry. The amendment will take effect on September 30 2013.
The EU, while not formally applying EITI, started the adoption of a similarly stringent set of transparency requirements in early April 2013. The regulations, to be implemented and operational by 2015, require every EU-listed and large non-listed company to report revenues generated in every country in which they operate on a project-by-project basis. Along with this requirement, these extractive companies will have to publish all transfers made to the governments of the countries in which they operate.
Page 86
Appendix
Latin America - Regional Appendix
The data contained in these appendix tables is correct as of 27 March 2013. It represents a snapshot of our regional forecasts at the end of our last publishing quarter. It is included for reference purposes only. Latest data, reflecting forecasts made for the market this quarter, can be found in the Industry Forecast Scenario section of this report. Please note, that because this table represents a snapshot of our last regional forecasts, whereas data included in the Industry Forecast Scenario represents our latest forecasts made this quarter, country-specific data may not match.
Table: Oil Consumption - Historical Data & Forecasts, 2010-2017 ('000b/d)
2010 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 623.00 54.35 2,560.00 286.00 285.00 201.00 2,072.96 189.00 41.00 776.17
2011 647.92 62.00 2,793.00 322.74 298.00 201.00 2,078.35 195.62 40.00 787.81
2012e 660.88 63.24 2,932.65 332.42 305.45 209.96 2,130.30 201.48 41.40 854.77
2013f 674.10 64.50 3,108.61 335.74 313.09 218.36 2,172.91 207.53 43.47 867.60
2014f 687.58 65.79 3,295.13 338.97 320.91 227.10 2,205.50 213.75 45.64 884.95
2015f 701.33 67.11 3,476.36 341.83 328.94 236.09 2,227.56 218.03 47.93 902.65
2016f 718.86 68.45 3,667.56 345.65 337.16 245.02 2,249.83 222.39 50.32 920.70
2017f 733.24 69.82 3,832.60 348.52 345.59 254.06 2,272.33 226.84 52.84 939.11
BMI Universe other LatAm
7,088 1,183
7,426 1,195
7,733 1,207
8,006 1,219
8,285 1,225
8,548 1,231
8,826 1,237
9,075 1,243
Regional Total
8,271
8,621
8,939
9,224
9,510
9,779
10,063
10,318
Page 87
Table: Oil Consumption - Long-Term Forecasts, 2014-2021 ('000b/d)
2014f Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 687.58 65.79 3,295.13 338.97 320.91 227.10 2,205.50 213.75 45.64 884.95
2015f 701.33 67.11 3,476.36 341.83 328.94 236.09 2,227.56 218.03 47.93 902.65
2016f 718.86 68.45 3,667.56 345.65 337.16 245.02 2,249.83 222.39 50.32 920.70
2017f 733.24 69.82 3,832.60 348.52 345.59 254.06 2,272.33 226.84 52.84 939.11
2018f 747.90 71.22 4,024.23 353.29 354.23 263.51 2,295.06 231.37 55.48 957.90
2019f 762.86 72.64 4,265.68 357.11 363.08 272.04 2,318.01 236.00 58.25 977.05
2020f 778.12 74.10 4,521.62 362.84 372.16 280.21 2,341.19 240.72 61.17 996.59
2021f 793.68 75.58 4,792.92 368.66 381.47 291.41 2,437.13 245.54 64.22 1,016.53
8,285 1,225
8,548 1,231
8,826 1,237
9,075 1,243
9,354 1,249
9,683 1,256
10,029 1,262
10,467 1,268
Regional Total
9,510
9,779
10,063
10,318
10,604
10,938
11,291
11,735
Table: Oil Production - Historical Data & Forecasts, 2010-2017 ('000b/d)
2010 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 763.61 48.21 2,714 10.64 807.35 485.59 2,983 158.33 144.93 2,375
2011 748.54 49.99 2,687 9.23 939.97 501.19 2,964 157.17 135.40 2,470
2012e 739.54 50.87 2,881 9.00 982.15 504.50 2,947 166.17 132.68 2,867
2013f 754.54 49.88 3,053 7.60 1,111 507.52 2,936 191.17 131.35 2,981
2014f 775 49 3,393 6 1,190 510 2,886 251 130 3,114
2015f 763 48 3,631 6 1,220 512 2,812 311 130 3,261
2016f 745 50 3,867 5 1,333 512 2,717 351 129 3,456
2017f 745 49 4,349 5 1,393 511 2,625 346 129 3,697
Page 88
Oil Production - Historical Data & Forecasts, 2010-2017 ('000b/d) - Continued
2010 BMI Universe other LatAm 10,491 90
2011 10,662 92
2012e 11,280 95
2013f 11,722 99
2014f 12,304 104
2015f 12,692 109
2016f 13,164 115
2017f 13,848 121
Regional Total
10,581
10,755
11,375
11,821
12,408
12,802
13,279
13,968
Table: Oil Production - Long-Term Forecasts, 2014-2021 ('000b/d)
2014f Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 775 49 3,393 6 1,190 510 2,886 251 130 3,114
2015f 763 48 3,631 6 1,220 512 2,812 311 130 3,261
2016f 745 50 3,867 5 1,333 512 2,717 351 129 3,456
2017f 745 49 4,349 5 1,393 511 2,625 346 129 3,697
2018f 735 48 4,813 4 1,457 511 2,538 341 128 3,936
2019f 730 47 5,078 3 1,388 510 2,453 341 128 4,179
2020f 715 46 5,442 3 1,373 510 2,372 339 127 4,408
2021f 713 46 5,804 3 1,375 510 2,298 337 128 4,624
12,304 104
12,692 109
13,164 115
13,848 121
14,510 127
14,857 133
15,334 140
15,836 146
Regional Total
12,408
12,802
13,279
13,968
14,636
14,990
15,474
15,982
Page 89
Table: Refining Capacity - Historical Data & Forecasts, 2010-2017 ('000b/d)
2010 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 631.18 41.20 2,010 226.80 285.85 175.00 1,540 193.10 168.00 1,282
2011 631.18 41.20 2,010 300.00 335.85 175.00 1,540 193.10 168.00 1,282
2012e 631.18 41.20 2,200 300.00 335.85 175.00 1,540 193.10 168.00 1,282
2013f 631.18 41.20 2,390 300.00 400.85 175.00 1,540 193.10 168.00 1,342
2014f 631.18 41.20 2,690 300.00 465.85 175.00 1,540 193.10 168.00 1,342
2015f 631.18 41.20 2,990 300.00 465.85 175.00 1,540 221.10 168.00 1,342
2016f 631.18 41.20 2,990 300.00 465.85 175.00 1,540 231.10 168.00 1,342
2017f 631.18 41.20 3,140 300.00 465.85 175.00 1,540 231.10 168.00 1,342
Total
7,108
7,231
7,421
7,736
8,101
8,429
8,439
8,589
Table: Refining Capacity - Long-Term Forecasts, 2014-2021 ('000b/d)
2014f Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 631.18 41.20 2,690 300.00 465.85 175.00 1,540 193.10 168.00 1,342
2015f 631.18 41.20 2,990 300.00 465.85 175.00 1,540 221.10 168.00 1,342
2016f 631.18 41.20 2,990 300.00 465.85 175.00 1,540 231.10 168.00 1,342
2017f 631.18 41.20 3,140 300.00 465.85 175.00 1,540 231.10 168.00 1,342
2018f 631.18 41.20 3,290 300.00 465.85 175.00 1,540 231.10 168.00 1,510
2019f 631.18 41.20 3,290 300.00 465.85 175.00 1,540 231.10 168.00 1,510
2020f 631.18 41.20 3,290 300.00 465.85 175.00 1,540 231.10 168.00 1,510
2021f 631.18 41.20 3,290 300.00 465.85 175.00 1,540 231.10 168.00 1,510
Total
8,101
8,429
8,439
8,589
8,907
8,907
8,907
8,907
Page 90
Table: Gas Consumption - Historical Data & Forecasts, 2010-2017 (bcm)
2010 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 43.29 2.70 25.20 5.32 9.08 0.33 60.44 5.41 22.08 27.11
2011 44.16 2.44 28.98 5.85 9.35 0.24 61.29 5.95 22.39 27.22
2012e 45.92 2.57 31.15 6.14 9.63 0.25 62.15 6.37 22.83 28.99
2013f 47.76 2.70 33.33 6.45 9.92 0.25 64.70 6.81 23.40 31.31
2014f 49.67 2.84 35.33 6.77 10.22 0.26 67.25 7.29 23.99 34.44
2015f 51.66 2.98 37.45 7.18 10.53 0.26 72.36 7.73 24.71 37.20
2016f 53.72 3.13 39.51 7.66 10.84 0.27 76.62 8.19 25.45 40.17
2017f 55.87 3.27 41.69 8.04 11.17 0.28 80.02 8.60 26.72 42.58
Total
200.96
207.87
216.01
226.65
238.07
252.06
265.57
278.25
Table: Gas Consumption - Long-Term Forecasts, 2014-2021 (bcm)
2014f Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 49.67 2.84 35.33 6.77 10.22 0.26 67.25 7.29 23.99 34.44
2015f 51.66 2.98 37.45 7.18 10.53 0.26 72.36 7.73 24.71 37.20
2016f 53.72 3.13 39.51 7.66 10.84 0.27 76.62 8.19 25.45 40.17
2017f 55.87 3.27 41.69 8.04 11.17 0.28 80.02 8.60 26.72 42.58
2018f 58.11 3.41 44.61 8.43 11.56 0.29 84.28 9.03 28.06 45.14
2019f 60.43 3.56 48.17 8.85 11.96 0.30 89.39 9.48 29.46 47.85
2020f 62.85 3.71 52.03 9.29 12.38 0.30 93.65 9.86 30.93 50.72
2021f 65.36 3.85 56.71 9.75 12.81 0.31 97.62 10.26 32.48 53.76
Total
238.07
252.06
265.57
278.25
292.91
309.45
325.72
342.93
Page 91
Table: Gas Production - Historical Data & Forecasts, 2010-2017 (bcm)
2010 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 40.09 14.37 12.59 1.10 10.50 0.33 48.78 7.23 42.46 24.93
2011 39.00 15.60 14.58 0.84 11.00 0.24 46.80 7.50 40.76 25.11
2012e 37.50 16.80 15.02 0.90 11.00 0.26 46.00 9.30 39.95 26.12
2013f 38.50 17.90 15.47 1.00 11.50 0.27 46.39 10.30 39.15 27.29
2014f 39.00 18.60 16.09 1.10 12.00 0.28 47.00 11.50 38.76 31.39
2015f 39.00 19.30 16.73 1.20 12.50 0.29 49.00 12.00 39.92 33.08
2016f 40.00 20.00 17.74 1.00 13.50 0.29 49.41 13.00 40.72 34.74
2017f 40.50 21.00 19.16 0.95 13.50 0.30 49.83 13.50 41.53 36.44
Total
202.38
201.44
202.84
207.77
215.71
223.02
230.40
236.70
Table: Gas Production - Long-Term Forecasts, 2014-2021 (bcm)
2014f Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela 39.00 18.60 16.09 1.10 12.00 0.28 47.00 11.50 38.76 31.39
2015f 39.00 19.30 16.73 1.20 12.50 0.29 49.00 12.00 39.92 33.08
2016f 40.00 20.00 17.74 1.00 13.50 0.29 49.41 13.00 40.72 34.74
2017f 40.50 21.00 19.16 0.95 13.50 0.30 49.83 13.50 41.53 36.44
2018f 41.50 22.00 20.88 0.90 15.50 0.31 50.25 14.00 42.78 37.68
2019f 42.00 21.50 22.76 0.80 15.50 0.31 50.67 15.00 43.63 38.81
2020f 43.00 21.00 24.58 0.70 16.00 0.31 51.09 15.75 44.51 40.90
2021f 43.00 20.50 26.42 0.70 16.50 0.31 51.52 16.00 45.84 42.95
Total
215.71
223.02
230.40
236.70
245.79
250.98
257.84
263.74
Page 92
Table: LNG Exports - Historical Data & Forecasts, 2010-2017 (bcm)
2010 Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela -1.83 0.00 -3.00 -3.07 0.00 0.00 -3.55 1.82 20.38 0.00
2011 -2.80 0.00 -3.00 -5.01 0.00 0.00 -3.55 1.55 18.38 0.00
2012e -3.00 0.00 -3.00 -5.24 0.00 0.00 -4.55 2.93 17.11 0.00
2013f -5.00 0.00 -5.00 -5.45 0.25 0.00 -6.00 3.49 15.74 0.00
2014f -6.00 0.00 -6.00 -5.67 0.50 0.00 -7.00 4.21 14.77 0.00
2015f -8.00 0.00 -6.00 -5.98 0.50 0.00 -9.55 4.27 15.21 0.00
2016f (8.00) (6.00) (6.66) 0.50 (9.55) 4.81 15.27 -
2017f (8.00) (6.00) (7.09) 0.50 (9.55) 4.90 14.81 -
BMI Universe
11
-2
-5
-10
-10
-10
Total
10.75
5.57
4.25
(1.97)
(5.20)
(9.55)
(9.63)
(10.43)
Table: LNG Exports - Long-Term Forecasts, 2014-2021 (bcm)
2014f Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Peru Trinidad and Tobago Venezuela -6.00 0.00 -6.00 -5.67 0.50 0.00 -7.00 4.21 14.77 0.00
2015f -8.00 0.00 -6.00 -5.98 0.50 0.00 -9.55 4.27 15.21 0.00
2016f (8.00) (6.00) (6.66) 0.50 (9.55) 4.81 15.27 -
2017f (8.00) (6.00) (7.09) 0.50 (9.55) 4.90 14.81 -
2018f (9.00) (6.00) (7.53) 0.50 (9.55) 4.97 14.72 -
2019f (9.00) (4.00) (8.05) 0.50 (9.55) 5.52 14.17 -
2020f (11.00) (4.00) (8.59) 0.50 (9.55) 5.89 13.57 -
2021f (11.00) (5.00) (9.05) 0.50 (9.55) 5.74 13.36 -
BMI Universe
-5
-10
-10
-10
-12
-10
-13
-15
Page 93
LNG Exports - Long-Term Forecasts, 2014-2021 (bcm) - Continued
2014f Total (5.20)
2015f (9.55)
2016f (9.63)
2017f (10.43)
2018f (11.89)
2019f (10.41)
2020f (13.18)
2021f (15.00)
Page 94
Glossary
Table: Glossary Of Terms
AOR APA API bbl bcm b/d bn boe BTC BTU Capex CBM CEE CPC CSG DoE EBRD EEZ e/f EIA EM EOR E&P EPSA FID FDI FEED FPSO FTA FTZ GDP
Additional Oil Recovery Awards for Predefined Areas American Petroleum Institute barrel billion cubic metres barrels per day billion barrels of oil equivalent Baku-Tbilisi-Ceyhan Pipeline British Thermal Unit capital expenditure coal bed methane Central and Eastern Europe Caspian Pipeline Consortium coal seam gas US Department of Energy European Bank for Reconstruction & Develpt exclusive economic zone estimate/forecast US Energy Information Administration emerging markets enhanced oil recovery exploration and production exploration and production sharing agreement final investment decision foreign direct investment front end engineering & design floating production, storage & offloading free trade agreement free trade zone gross domestic product
KCTS km LAB LDPE LNG LPG m mcm Mcm MEA mn MoU mt MW na NGL NOC OECD OPEC PE PP PSA PSC q-o-q R&D R/P RPR SGI SoI SPA SPR
Kazakh Caspian Transport System kilometres Linear Alkyl Benzene low density polypropylene liquefied natural gas liquefied petroleum gas metres thousand cubic metres mn cubic metres Middle East and Africa million Memorandum of Understanding metric tonne megawatts not available/ applicable natural gas liquids national oil company Organisation for Economic Cooperation & Development Organization of the Petroleum Exporting Countries polyethylene polypropylene production sharing agreement production sharing contract quarter-on-quarter research and development reserves/production reserves to production ratio strategic gas initiative Statement of Intent Sale and Purchase Agreement Strategic Petroleum Reserve
Page 95
Glossary Of Terms - Continued
AOR G&G GoM GS GTL GW GWh HDPE HoA IEA IGCC IOC IPI IPO JOC JPDA AOR
Additional Oil Recovery geological and geophysical Gulf of Mexico geological survey gas-to-liquids conversion gigawatts gigawatt hours high density polyethylene Heads of Agreement International Energy Agency Integrated Gasification Combined Cycle international oil company Iran-Pakistan-India Pipeline initial public offering joint operating company Joint Petroleum Development Area Additional Oil Recovery
KCTS t/d tcm toe tpa TRIPS trn T&T TTPC TWh UAE USGS WAGP WIPO WTI WTO KCTS
Kazakh Caspian Transport System tonnes per day trillion cubic metres tonnes of oil equivalent tonnes per annum Trade-Related Aspects of Intellectual Property Rights trillion Trinidad and Tobago Trans-Tunisian Pipeline Company terawatt hours United Arab Emirates US Geological Survey West African Gas Pipeline World Intellectual Property Organisation West Texas Intermediate World Trade Organisation Kazakh Caspian Transport System
Source: BMI
Page 96
Methodology
Oil & Gas Risk/Reward Ratings Methodology
BMI's approach in assessing the risk/reward balance for oil and gas industry investors is threefold. First, we have disaggregated the upstream (oil and gas E&P) and downstream (oil refining and marketing, gas processing and distribution), enabling us to take a more nuanced approach to analysing the potential within each segment, and identifying the different risks along the value chain. Second, we have identified objective indicators that may serve as proxies for issues and trends that were previously evaluated on a subjective basis. Finally, we have used BMI's proprietary Country Risk Ratings (CRR) in a more refined manner in order to ensure that only those risks most relevant to the industry have been included. Overall, the new ratings system - which is now integrated with those of all industries covered by BMI - offers an industryleading insight into the prospects/risks for companies across the globe.
Ratings Overview
Conceptually, the new ratings system is organised in a manner that enables us clearly to present the comparative strengths and weaknesses of each state. As before, the headline oil and gas rating is the principal rating. However, the differentiation of upstream and downstream and the articulation of the elements that comprise each segment enable more sophisticated conclusions to be drawn, and also facilitate the use of the ratings by clients who have varying levels of exposure and risk appetite. Oil & Gas Risk Reward Rating: This is the overall rating, which comprises 50% upstream BER and 50% downstream; Upstream Oil & Gas Risk Reward Rating: This is the overall upstream rating, which is composed of rewards/risks (see below); Downstream Oil & Gas Risk Reward Rating: This is the overall downstream rating, which comprises rewards/risks (see below);
Both the upstream RRR and downstream RRR are composed of Rewards/Risks sub-ratings, which themselves comprise industry-specific and broader country risk components; Rewards: Evaluates the sector's size and growth potential in each state, and also broader industry and state characteristics that may inhibit its development;
Page 97
Risks: Evaluates both industry-specific dangers and those emanating from the state's political and economic profile that call into question the likelihood of expected returns being realised over the assessed time period.
Table: BMI's Oil & Gas Risk Reward Ratings - Structure
Component Oil & Gas Risk Reward Rating Upstream RRR Rewards - Industry rewards - Country rewards Risks - Industry risks - Country risks Downstream RRR Rewards - Industry rewards - Country rewards Risks - Industry risks - Country risks
Details Overall rating 50% of Oil & Gas RRR 70% of Upstream RRR 75% of Rewards 25% of Rewards 30% of Upstream RRR 65% of Risks 35% of Risks 50% of Oil & Gas RRR 70% of Downstream RRR 75% of Rewards 25% of Rewards 30% of Downstream RRR 60% of Risks 40% of Risks
Source: BMI
Indicators
The following indicators have been used. Overall, the rating uses three subjectively measured indicators and 41 separate indicators/datasets.
Table: BMI's Oil & Gas Business Environment Upstream Ratings - Methodology
Indicator Upstream RRR: Rewards Industry rewards Resource base - Proven oil reserves, mn bbl
Rationale
Indicators used to denote total market potential. High values given better scores.
Page 98
BMI's Oil & Gas Business Environment Upstream Ratings - Methodology - Continued
Indicator - Proven gas reserves, bcm Growth outlook - Oil production growth, 2009-2014 - Gas production growth, 2009-2014 Market maturity
Rationale
Indicators used as proxies for BMI's market assumptions, with strong growth accorded higher scores.
- Oil reserves/production - Gas reserves and production - Current oil production vs peak - Current gas production vs peak Country rewards State ownership of assets, % Number of non-state companies
Indicator used to denote whether industries are frontier/emerging/developed or mature markets. Low existing exploitation in relation to potential is accorded higher scores.
Indicator used to denote opportunity for foreign NOCs/IOCs/independents. Low state ownership scores higher. Indicator used to denote market competitiveness. Presence (and large number) of non-state companies scores higher.
Upstream BER: Risks Industry risks Licensing terms Privatisation trend Country risks Physical infrastructure Long-term policy continuity risk Rule of law Corruption Rating from BMI's CRR. It evaluates the constraints imposed by power, transport and communications infrastructure. From CRR It evaluates the risk of a sharp change in the broad direction of government policy. From CRR. It evaluates government's ability to enforce its will within the state. From CRR, to denote risk of additional legal costs and possibility of opacity in tendering or business operations affecting companies' ability to compete. Subjective evaluation of government policy towards sector against BMIdefined criteria. Protectionist states are marked down. Subjective evaluation of government industry orientation. Protectionist states are marked down.
Source: BMI
Page 99
Oil & Gas Forecasts Methodology

BMI's industry forecasts are generated using the best-practice techniques of time-series modelling. The precise form of time-series model we use varies from industry to industry, in each case being determined, as per standard practice, by the prevailing features of the industry data being examined. For example, data for some industries may be particularly prone to seasonality, meaning seasonal trends. In other industries, there may be pronounced non-linearity, whereby large recessions, for example, may occur more frequently than cyclical booms.
Our approach varies from industry to industry. Common to our analysis of every industry, however, is the use of vector autoregressions. Vector autoregressions allow us to forecast a variable using more than the variable's own history as explanatory information. For example, when forecasting oil prices, we can include information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile form of univariate models: the autoregressive moving average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historical data or data quality is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting.
It must be remembered that human intervention plays a necessary and desirable part of all our industry forecasting techniques. Intimate knowledge of the data and industry ensures we spot structural breaks, anomalous data, turning points and seasonal features where a purely mechanical forecasting process would not
Energy Industry
There are a number of principal criteria that drive our forecasts for each Energy indicator.
Energy supply
Supply of crude oil, natural gas, refined oil products and electrical power is determined largely by investment levels, available capacity, plant utilisation rates and national policy. We therefore examine:
Page 100
National energy policy, stated output goals and investment levels; Company-specific capacity data, output targets and capital expenditures, using national, regional and multinational company sources; International quotas, guidelines and projections such as OPEC, IEA, and EIA.
Energy consumption
A mixture of methods are used to generate demand forecasts, applied as appropriate to each individual country:
Underlying economic (GDP) growth for individual countries/regions, sourced from BMI published estimates. Historic relationships between GDP growth and energy demand growth at an individual country are analysed and used as the basis for predicting levels of consumption; Government projections for oil, gas and electricity demand; Third-party agency projections for regional demand, such as IEA, EIA, OPEC;
Extrapolation of capacity expansion forecasts based on company- or state-specific investment levels.
Cross checks
Whenever possible, we compare government and/or third party agency projections with the declared spending and capacity expansion plans of the companies operating in each individual country. Where there are discrepancies, we use company-specific data as physical spending patterns to ultimately determine capacity and supply capability. Similarly, we compare capacity expansion plans and demand projections to check the energy balance of each country. Where the data suggest imports or exports, we check that necessary capacity exists or that the required investment in infrastructure is taking place.
Sources
Sources include those international bodies mentioned above such as OPEC, IEA, and EIA, as well as local energy ministries, official company information, and international and national news, and international and national news agencies.
Page 101

BMI Argentina Oil and Gas Report Q3 2013

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

BMI Argentina Oil and Gas Report Q3 2013

Hochgeladen von

Copyright:

Verfügbare Formate

Q3 2013

Argentina Oil & Gas Report Q3 2013

Part of BMIs Industry Report & Forecasts Series

Argentina Oil & Gas Report Q3 2013

Oil Supply And Demand .......................................................................................................................... 13

Gas Supply And Demand ......................................................................................................................... 16

Refining And Oil Products Trade .............................................................................................................. 20

Revenues/Import Costs ............................................................................................................................ 21

Industry Risk Reward Ratings .......................................................................................... 22

Upstream: Production Growth Forecasts Reinforce Regional Polarization ....................................................... 25

Downstream: Medium-Term Outlook Reinforces Current Dynamics ................................................................ 27

Market Overview ............................................................................................................... 30

Table: Argentina - Upstream Projects Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Business Monitor International

Competitive Landscape .................................................................................................... 41

Company Profile ................................................................................................................ 44

Regional Overview ............................................................................................................ 66

Global Industry Overview .................................................................................................. 73

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Business Monitor International

Argentina Oil & Gas Report Q3 2013

BMI Industry View

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Business Monitor International

Argentina Oil & Gas Report Q3 2013

SWOT Analysis - Continued

Business Monitor International

Argentina Oil & Gas Report Q3 2013

e/f = estimate/forecast. Source: EIA, BMI

Business Monitor International

Argentina Oil & Gas Report Q3 2013

f = forecast. Source: EIA, BMI

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Oil Supply And Demand

-75.1 -416.1 0.2 -0.6

-76.0 -407.0 0.1 0.2 0.3 -0.3 -0.6 -0.9

e/f = estimate/forecast. Source: EIA, BMI

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Table: Argentina Oil Production, Consumption And Net Exports

f = forecast. Source: EIA, BMI

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Argentine Oil Production, Consumption & Net Exports

2011 production levels.

e/f = estimate/forecast. Source: EIA, BMI

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Gas Supply And Demand

2012e 37.5 -3.3 20.4 -1.5 5.4 16.1 24.1

2013f 38.5 2.7 20.7 1.3 5.5 16.5 24.8

2014f 39.0 1.3 20.2 -2.5 5.6 16.7 25.1

2015f 39.0 0.0 19.6 -2.9 5.6 16.7 25.1

2016f 40.0 2.6 19.7 0.5 5.7 17.1 25.7

Business Monitor International

Argentina Oil & Gas Report Q3 2013

Argentina Gas Production, Consumption And Net Exports - Continued