LONDON 22 MAY - 2019

Argentina – UK: Partners for growth

1. Energy potential of Neuquen Province

2. Major advances in development of unconventional oil & gas

3. Challenges and opportunities over the coming years

PRESENTATION OUTLINE

FIGURES TO 2019

Production of oil as % of

country total 25%

% of unconventional oil of

Neuquen total 61%

Production of gas as % of

country total 54%

% of unconventional natural

gas of Neuquen total

68%

Unconventional

Concessions: 34

Surface area of

unconventional

Concessions:

8,222 km2

% of CENCH as proportion

of Vaca Muerta total

27%

NEUQUEN IN NUMBERS

• 4,665 MW of Installed Hydroelectric Power over five sites on the Limay and Neuquen rivers.

• 43% of national hydroelectric power/13% of total power.

• In 2018 8% of national electricity generation came from hydroelectric plants located in Neuquen.

• The province boasts over 2,400 MW of hydroelectric power.

El Chañar Plant 24MW

Cerro Rayoso Plant 560MW

Chihuidos I Plant 637MW

Chihuidos II Plant 240MW

La Invernada Plant 560MW

6 PAH on Neuquen and Varvarco rivers Total 336MW

3 PAH on Neuquen and Nahueve rivers 80.7MW

PAH Nahueve 4.5MW

Aprovechamiento H. Alicurá 1.050MW

Piedra del Águila Plant 1,440MW

Pichi Picún Leufú Plant 285MW

El Chocón Plant 1290MW

Arroyito Plant 128MW

ELECTRIC ENERGY: HYDROELECTRIC PRODUCTION

• Nine wind energy projects totalling 800MW.

• Two in construction: Los Meandros and Vientos Neuquinos I, which were awarded through the RenovAr and MATER programme.

• Seven projects totalling 600 MW.

• Geothermal project totalling 100MW.

Vientos Neuquinos I W.P. 100MW Allocated through MATER

Picún Leufú W.P. 100MW

Cerro Senillosa W.P. 100MW

Los Meandros W.P. 125MW 75MW Power Allocated through RenovAr

Añelo I W.P. 100MW

La Americana W.P. 50MW

Los Pocitos W.P. 50MW

Añelo II W.P. 100MW

Loma Jarillosa W.P. 100MW

Domuyo Geothermal Project 90/100MW

ELECTRIC ENERGY: WIND POWER AND GEOTHERMAL

• 1,840 MW of Installed thermal power. 98% of which have natural gas as the principal fuel.

• 8% of national thermal power/5% of total power.

Aluminé Secco T.P. 6.3MW Alto Valle T.P. 96MW

Agua del Cajón T.P. 184MW

Caviahue Secco T.P. 5MW

Filo Morado T.P. 63MW

Loma la Lata T.P. 660MW

Loma la Lata II T.P. 105MW

CAPEX Agua del Cajón T.P. 477W

Loma Campana T.P. 212MW

Medanito T.P. 32MW

ELECTRIC ENERGY: THERMAL GENERATION

• Vaca Muerta compared with

other major formations

around the world:

– 4th shallowest

– 5th largest usable depth

– 5th in organic matter content.

– 2nd largest unconventional gas

resource

– 4th largest unconventional oil

resource

VACA MUERTA

• 34 Unconventional Drilling Concessions (CENCH) covering 8,222 km2.

• 8.26 billion US$ of investments pledged in pilots.

• 7 areas under development. With a surface area of 1,269 km2 (15% of CENCH, 4% of Vaca Muerta total).

• Involvement of both national and international firms.

DEVELOPMENTS AT VACA MUERTA

₋ Neuquen’s unconventional oil accounts for 16% of total national oil production.

₋ Neuquen’s unconventional natural gas accounts for 37% of total national natural gas production.

₋ Year-on-year growth in oil and gas production of 18% and 11%, in first Q2019.

HYDROCARBON PRODUCTION NEUQUEN

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Oil production Neuquen

Conventional Unconventional %NQN/ARG

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INFRAESTRUCTURA DE TRANSPORTE TRANSPORT INFRASTRUCTURE

• Domestic market transportation capacity:

₋ Natural Gas: 76 MMm3/d. In 2018 67 MMm3/d were injected.

₋ Oil: 260 Mbbl/d.

• Overseas market transportation capacity:

₋ Natural Gas to Chile: 13.5 MMm3/d. In first four months of 2019 exports reached peaks of 6 MMm3/d.

₋ Oil to Chile: 100 Mbbl/d. Oleodúctos Chile: 100 Mbbl/d

Gasoductos MI: 76 MMm3/d

Gasoductos Chile: 13 MMm3/d

Oleodúctos MI: 260 Mbbl/d

MEJORAS EN EFICIENCIA

Average fractures per well Average length of lateral branch

Metres drilled per day • Incorporation of technology and know-how.

• Greater knowledge of behaviour of the formation

• Scale of development in different projects, by different firms.

IMPROVEMENTS IN EFFICIENCY

MEJORAS EN PRODUCTIVIDAD Accumulated average production: Oil per well

IMPROVEMENTS IN PRODUCTIVITY

Accumulated average production: Natural Gas per well

• Sustained improvement in productivity over time.

• Productivity on par with developments in the United States.

• Positive results in the length of lateral branches and a greater intensity in the number of fractures.

• There is still room for improvement in well productivity.

EVOLUCIÓN DE LAS INVERSIONES HIDROCARBURIFERAS EN NEUQUÉN

2,202

3,487

4,834 5,150

3,266 3,468

4,185

5,343

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6.000

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US$

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Oil & Gas Investments Neuquen

No Convencional

Convencional

INVESTMENTS NEUQUEN OIL AND GAS SECTOR

• Record investments in the sector, mainly in unconventional drilling.

• New projects entering development phase.

• Greater diversity of firms operating the areas.

Under scenarios with conservative drilling estimates, the volume of production will outstrip historic records for the basin in just a few years (even surpassing current national values).

PRODUCCIÓN HIDROCARBUROS NEUQUÉN

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Potential natural gas prod. Neuquen

Conventional Unconventional

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Potential oil production Neuquen

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VACA MUERTA PRODUCTION POTENTIAL

DESAFÍOS PARA AFIANZAR EL DESARROLLO DE VACA MUERTA

• Improve the learning curve to increase efficiency and productivity.

• Reinforce availability of services and equipment for the industry that enable them to continue cutting costs.

• Investment in infrastructure to increase capacity for evacuation/development of storage and liquefaction.

• Availability of production infrastructure and social infrastructure.

SECTOR CHALLENGES TO CONSOLIDATE DEVELOPMENT

• Increasing demand for natural gas as a transition fuel:

₋ Domestic Market.

▫ Residential use.

▫ To substititue liquids.

▫ To generate back-up energy stock for renewable sources.

▫ For the development of gas-intensive industries.

₋ Foreign Market:

▫ At the regional level. Chile – Southern Brazil.

▫ To border countries in the form of electricity.

▫ Liquefied Natural Gas (LNG).

• Constant Improvement in Competitiveness.

MARKET DEVELOPMENT