Argentina aims to eliminate its need for crude imports while increasing domestic oil output to 653,000 barrels per day (Mbbl/d) in 2025, a 23% increase from 2015, an official from the Energy Ministry said on May 26.
The South American country is working to cover its energy needs after becoming a net importer of energy products three years ago due to decreasing output amid a low investment environment.
To achieve that, it needs to boost local output to cut crude imports and start reducing costly purchases of LNG currently made through tenders on the open market and from neighboring Chile.
"We don't believe in self sufficiency. We believe in supplying the country's needs," said Daniel Redondo, energy planning secretary from the Energy Ministry, at a conference in La Jolla, Calif.
The ministry expects Argentina will be forced to keep importing LNG for at least five years, but incentives given to Argentine producers to enable them to sell their crudes domestically at a price of $55/bbl to $67.50/bbl would help reduce imports.
It is not clear for how long the government will maintain this price incentive for producers.
At the end of 2015, Argentina's energy imports surpassed exports by $6.5 billion, Redondo said.
Refining firms have imported 2 MMbbl of African crudes this year to feed plants with light crude grades that are not abundant in Argentina, and they plan to import at least 1 MMbbl more in the second half of the year.
But talks between producers and refiners are being held under the Energy Ministry's supervision to ensure all light oil produced domestically will be processed in the country. State-run YPF has had a recent surplus of light grades.
The new government of Mauricio Macri is trying to attract foreign capital to the oil industry after a decade of low investment and the nationalization of its main producer, YPF. It also wants to limit its purchases of foreign petroleum to gas imports from Bolivia and gasoil imports for winter.
The Energy Ministry estimates that about $50 billion will be needed until 2025 to develop upstream and downstream projects, including a 200 Mbbl/d expansion to its refining network.
"In the energy sector we inherited a legal, institutional and functional disorder. Roles and responsibilities are not clear, decisions are discretionary and there's a lack of transparency," Redondo said. "We are trying to go back to normal."
U.S. energy firms this week reduced the number of oil rigs operating for a third week in a row as weaker oil prices encourage drillers to follow through on plans to cut spending.
Operators continue drilling in one of the most attractive oil plays in the Rocky Mountain region.
Royal Dutch Shell subsidiary Shell Offshore Inc. said on May 23 that it had started up its Appomattox project in the deepwater U.S. Gulf of Mexico (GoM) several months ahead of schedule.