Argentinian public energy firm YPF cut oil production from its key development zone by 50% in the vast Vaca Muerta shale deposit this week due to falling fuel demand in Argentina’s foreclosure, reports the local newspaper Rio Negro.
Fuel demand in Argentina, blocked since March 20, plummets and YPF lacks storage for its crude oil, so the public energy company has closed 50% of its production wells in the development of Loma Campana.
Other companies, such as Vista Oil & Gas, have also cut production due to falling fuel demand in the country, Rio Negro reported.
Late last month, YPF warned that nationwide mandatory quarantine has already reduced fuel demand in Argentina and said there are “tough” times for the company. YPF executive chairman Daniel Gonzalez said in an internal company video seen by Reuters that Argentina’s demand for gasoline had already dropped 70% five days after the mandatory lockdown, adding that demand for diesel had dropped by nearly 50% and demand for kerosene had collapsed by 90%.
“This will leave us with the need to export cheap crude oil, with which our revenues will clearly be negatively affected,” Gonzalez said in the video.
The collapse in demand first led refineries to fill their tanks. After the stocks filled up the storage in Argentina, it became clear that part of the production had to be reduced, according to the Rio Negro outlet.
YPF has therefore decided to cut its oil production by 50 percent at Loma Campana in the main Argentine shale area, Vaca Muerta, where the Argentine state-owned oil company is partnering with the American super-major Chevron. YPF produces more than 40,000 bpd at Loma Campana, and has reportedly agreed with Chevron to cut oil production, Rio Negro reported.
By Tsvetana Paraskova for Oilprice.com
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