What does the new YPF brand try to convey?

Three years ago we started a deep transformation of YPF that culminated in a new mission: ‘We transform lives through energy’. One of the main changes in the organization is that we now put the clients and the society at the center of our strategies. Moreover, we have become an energy company, rather than an oil and gas company, with a much stronger focus and sustainability. Finally, we wanted our brand to be attractive not just for our clients, but also to attract and retain talent.

YPF Química underwent the same process. The current environment is much more challenging for a company like ours in terms of sustainability and innovation. What we want to achieve is successful innovation to solve society’s problems. Our slogan at YPF Química is ‘Intelligence to transform your world’, and we have a technological center called Y-TEC in order to promote this goal, together with partners and peer companies. An ultimate objective is to push the development of the industry using the resources of Vaca Muerta.

Could you remind us of YPF Química’s current installed capacity?

YPF Química has an annual output of around 2.2 million tonnes (mt/y). We sell our products to more than 20 countries, including the U.S. and Europe. We have three industrial complexes: one located next to our La Plata refinery, mostly dedicated to aromatics and their derivatives using naphtha as feedstock, and with a capacity of 500,000 mt/y; we also produce several specialties there, including linear alkylbenzene, that is a feedstock for bio-degradable detergents, and also maleic anhydride, polyisobutylene, and solvents.

Our largest complex is our fertilizers unit in Bahía Blanca (Profertil, a 50-50 joint venture with Nutrient), that produces 1.3 million mt/y of urea. Here we see important growth opportunities, not just because we have an excess of feedstock, but also because the Latin American market has a growing deficit of fertilizers, especially in Brazil. We have a project to double production capacity at Profertil currently under evaluation.

The third industrial complex is Plaza Huincul, in Neuquén, very close to the Vaca Muerta play. We produce 400,000 mt/y of methanol there. The plant is very efficient from an operational perspective although it incurs high logistics costs because it is far from end users – the biodiesel market in Argentina is 2,000 km away, and export ports are 1,500 km away to take it to Brazil or the U.S.

How does production at Vaca Muerta continue to evolve?

We have seen spectacular growth (+77%) in the production of shale oil and gas during 2019 (Q3 2019 vs Q3 2018), and in parallel to that, conventional production is declining. We already produce more than 100,000 barrels of oil equivalent per day in Vaca Muerta, and that represents around 35% of our total production.

Argentina started LNG exports in 2019. What are the gas supply and demand dynamics right now?

There is a structural surplus of gas that has pushed gas prices down. While this may sound promising for the petrochemical industry, it is not sustainable for the gas production business. Right now, producing oil is more profitable so more investment is flowing into oil production. In the gas market, the balancing point will only be achieved when we have world-class capacity to export LNG. This means 10 times the capacity we have today. YPF is leading a project for the construction of a mega LNG plant in Argentina that should be done as a joint venture with different players. That is going to be fundamental for the petrochemical industry to take off in Argentina.

What are your thoughts on the APLA meeting in Buenos Aires held in 2019, and APLA’s role as an industry association?

APLA has really put a lot of emphasis on sustainability and recycling issues. At the APLA Annual Meeting we could see first-hand how recycling is increasingly yielding results. We also showcased the first Argentinean-made electric vehicle, and the importance of petrochemical products to make these products lighter and more efficient.

We have seen how YPF is transforming, but APLA is also transforming and is becoming a true lighthouse that shows us the way in order to solve the problems that the wider society is facing today.