Policies, Opportunities and Challenges in the Argentine Energy Supply towards 2020

Fernando P. Giliberti – VP Strategy & Business Development

Norway – Argentina Energy Forum – July 1st 2016

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3 3

POLICIES towards 2020…

Energy

Infraestructure

Efficient supply of

energy demand

Energy

Subsidies

Reduced fiscal deficit

and rational use

of energy

Efficiency and

international

market

alignment

Competitiveness

and long-term value

of energy sources

Increase of

FDI

Regional Energy

Integration

Development of

industrial value

chains

4

Investment OPPORTUNITIES in Energy Sector

Expand porfolio

opportunities in new

frontiers (offshore,

heavy crude, deep

plays)

Improve recovery factor of

producing oil and gas fields

01

03

• O&G

05

04

Diversification of energy

sources developing renewable

energy

Increase investment in energy

infraestructure: power

generation and transmission,

O&G midstream and logistics

• Infraestructure

02 Increase production through

massive development of

unconventionals (resource

plays)

5

26%

44%

30%

0-20 years

20-35 years

+35 years

*Source: Wood MacKenzie and YPF elaboration. Based on the 60 main areas of Argentina

Increase Recovery Factor in Mature Fields

Years in production (%of fields)*

Only 26% of

fields have been in

production for less

than 20 years

35 years

Average years of production of top 10 oil

fields

20% Average Recovery factor. It could rise

above 35%.

Challenges

• Complex reservoir characterization

• Solution is specific and requires

technology

• New forms of supply chain

6 6

Massive Development of Unconventionals (Resource Plays)

YPF in Vaca Muerta

Operator # wells*

YPF 515

Total 23

Pluspetrol 12

Shell 12

Capex 6

YSUR (YPF) 4

Otros 30

Total 602

• Exploration

• Delineation

• Development

• 13 active

projects

(operated+JV)

* Wells drilled since beginning of Play Development: 602 /// Effective production: 537 (as of march-16) – source: GiGa Consulting

YPF’s JV

Loma Campana

La Amarga Chica

El Orejano

Rincón del Mangrullo

Republic of ArgentinaNeuquina Basin

Neuquén Province

Cost evolution horizontal wells

Challenges

• Predictive characterization of a large

reservoir (it is not a random walk)

• Application of predictive model to landing

of horizontal wells

• Operating model to sistematically reduce

costs with suppliers concurrence

(collaborative supplier ecosystem)

7

Frontier Exploration: Argentine Offshore

Vaca Muerta

> 1,200,000 km2 offshore area

> 400,000 km2 prospect area

Challenges

• Research and detailed studies of play concepts

• Minimum critical mass of exploratory investment

• Concurrence of experienced companies (operators)

and highly specialized suppliers

8 8

Argentina requires significant investment in energy infrastructure to meet current energy demand and to fuel sustainable growth

+5,000 MW Thermal generation & transmission

Energy sector needs in next 5 years…

+3,000 MW Renewable generation (Law 27.191 – 14% of power demand in 2020)

+7,000 km Pipelines (gathering + transmission)

USD 5,000 MM NG proccessing (petrochemical value chain)

+ USD 15,000 M of additional expenditure in infraestructure for

sustainable growth

Business Cases and Public Private Partnership (PPP)

Regional Mobility and Retraining from O&G sector

Improve

Competitiveness

9

o O&G sector has great potential and opportunities in different areas

(mature fields, offshore, unconventionals)

o The development of this potential requires time for project maturity

and for constructing a more efficient cost platform

o The infraestructure gap could be a “bridge” for O&G transformation

New macroeconomic conditions and current public policies seem to encourage industrial and

energy development

Takeaways…

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THANKS!