YPF warns that fuel prices are still behind

YPF’s latest price hike was unusual. The state-majority oil company moved its prices one day after its competitors. In this way, she was freed from the obligation to take the initiative and mark the path that others will follow. “You stillWe have to work to reduce the difference with international parity, which is around 25%”, said Sergio Affronti, CEO of YPF, in a conference with investors and analysts of the stock.

Fuel sales represent 50% of YPF’s total income. In recent months, the company increased the amounts of its fuels by 20%. As the official price of the dollar -which is the one taken by YPF- moved less, it had an improvement in dollars of 13%.

The company is always attentive to new increases, but it does so “considering the delicate balance that must be maintained in our sector and the impact of our decisions on customers and their ability to afford fuel costs in the local macroeconomic context” said the executive.

The increased demand for diesel meant that the company had to carry out more imports. “We are having fewer biofuels in our blends. That also requires a larger amount of average imports in terms of imports. We ended up importing 13% of the fuels we sold, which represents a drop compared to 15% (of imports over total sales), but it is still at higher levels than 7%, which is our historical average”, Affronti said.

Demand is “robust” and close to pre-pandemic levels, specifically to the first quarter of 2019. YPF incurs “small losses” when it dispatches some fuels (such as diesel) at its pumps, which “have been offset by price increases in the wholesale segments, particularly resale and sale of aviation fuels” , according to its authorities.

The possibility of connecting Vaca Muerta with Buenos Aires excites the energy sector. But the construction of the gas pipeline is not in charge of YPF, but of the state-owned IEASA. The Minister of Economy, Martín Guzmán, imagines that -after the gas pipeline- the next step could be the construction of a liquefied gas export terminal.

“There are opportunities in liquefied gas (LNG)but we are still a few years away from that, and from the materialization of an LNG plant”, according to Alejandro Lew, CFO (Finance Director) of YPF. “As you know, it will take several years to build (a terminal) and I would say it is a very challenging project in terms of the capital it requires,” he assured.

YPF is doing some engineering analysis and preliminary analysis work, but it is a long-term project. “We believe that progress with an LNG processing terminal is an interesting opportunity for the country and for YPF. And it will surely add opportunities to monetize the attractive resources that we have, particularly in Vaca Muerta, of natural gas that we could export to global markets,” he said. “But it is very difficult to predict a specific time for that project.”

By Editor