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Argentina could emulate the shale gas boom in the US, which has driven a surge in investment in petrochemicals projects, according to an industry representative.
Boasting the world's second largest endowment of technically recoverable shale gas reserves after the US, Argentina could do the same for Latin America, Marcos Sabelli - president of Latin American petrochemicals association APLA - told a panel at the Arpel 2017 oil and gas conference in Uruguay.
Sabelli said that only 1% of Argentina's flagship Vaca Muerta shale formation has been developed, and that most of those developments are still in the pilot phase.
If Argentina's shale industry can obtain economies of scale on par with those already reached in North America, there is no reason why Argentina can't stimulate a petrochemicals renaissance in Latin America as well, he said.
CHALLENGES FACING REFINERIES
Speaking on the same panel, an executive from Argentine national oil company YPF said Latin America's downstream oil and gas segment faces multiple challenges.
The region's refineries lag far behind those of the US in terms of processing capacity, energy efficiency, maintenance and operating costs, and desulfurization capacity, said the company's head of planning and technical development, Mauricio Martín.
Latin America's crude oil production basket is also becoming heavier and more sulfur-rich, Martín said, heightening the need to enhance desulfurization capability.
Caps on sulfur content in fuel oil consumed by the global shipping industry will become more stringent over the coming years as well, Martín told the conference.
A supply glut of refined products from the US amid growing demand from Latin America places additional pressure on the latter's downstream segment, namely national oil companies.
These challenges, while formidable, also present a major investment opportunity for the industry, Martín said.