Black gold: Argentina’s Vista squeezing oil export accelerator

Argentina-focused Vista Energy has raised its capex guidance for this year, as the lucrative oil export market blinks brightly on the radar of the company and its upstream peers.

Vista expects to spend US$500mn, up from the original US$400mn, citing drilling and well tie-in work in the second half of this year at core Vaca Muerta shale oil assets Bajada del Palo Oeste and Aguada Federal and pilot project Bajada del Palo Este.

Vista's oil production climbed 17% year-on-year to 36,900b/d in the second quarter, with shale oil accounting for 74% of total output. 

Exports accounted for US$147mn of total 2Q22 revenue of US$294mn, up from US$77.1mn out of 1Q22 revenue of US$208mn and US$26.8mn out of 2Q21 revenue of US$165mn.

Vista has raised 2022 production guidance to 47,000boe/d from an original forecast of 46,000-47,000boe/d, adding that the 2022 exit rate was likely to be around 52,000boe/d.

Realized oil prices of US$99/b in the export market in Q2, net of export tax, combined with saturated domestic demand for Vaca Muerta crude, is sharpening the focus of Vista and its peers on the export market. Domestic sales fetch a locally set price, which was around US$63/b in Q2.

Vista's expected production growth this half is projected to deliver lifting costs of US$7.5/boe for 2022. 

Vista expects exports to account for a growing proportion of its production in Argentina over the coming years, where midstream players are poised to expand transport and storage capacity to support growth from the Neuquén basin, home to Vaca Muerta.

Vista CEO Miguel Galuccio told the company’s 2Q22 results call: “We're today probably at an average of 40% [exports as a proportion of sales volumes]. We see 2024 around 50% and 2026 around 60%.”

Galuccio said other firms were following suit and that Vista’s export plan was “quite aggressive.” 

“As more Medanito [crude oil] production comes into play at Vaca Muerta, the country will have to export more volumes and we’ll play a part in that,” Galuccio said.

Argentina already produces more crude oil than the local refining sector can process. The country nevertheless tends to import some high-grade gasolines and diesel. 

For production of diesel – which has been in short supply in the country – refiners need heavier crudes from fields in the country’s south.

The government of Neuquén province, home to the bulk of the Vaca Muerta formation, said that in January-June producers in the jurisdiction exported 8.2Mb, up 222% year-on-year, generating revenue of US$797mn.

In June, Vista was the third biggest exporter from the province, registering foreign sales of 382,000b. The biggest Neuquén exporter in June was Malaysia’s Petronas, with 488,000b, the provincial government said. With a 50% interest, Petronas is partner at the state oil company YPF-operated block La Amarga Chica, which produced 6,248m3/d (39,298b/d) in March. This makes it the third highest producing oil concession in the country, according to operator data from the federal energy department. Vista's Bajada del Palo Oeste is the fourth highest producing concession. 

Neuquén’s goal is to reach output of 700,000b/d oil by 2030. The province’s target for this year is 308,000b/d. Production in May was around 279,000b/d, according to data from the province’s energy and natural resources ministry.

Nationally, overall oil output averaged 584,000b/d in May, up 14% year-on-year, as gas production grew 12% to 136Mm3/d. Unconventional oil output averaged 241,000b/d, up 57% year-on-year, while unconventional gas production was 76Mm3/d, up 39% year-on-year.

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