Argentina's state-held energy firm YPF slashed by 50 percent the oil production from its key development area in the vast Vaca Muerta shale play this week due to tumbling fuel demand in Argentina's lockdown, local news outlet Rio Negro reports.
Fuel demand in Argentina, under lockdown since March 20, is tumbling, and YPF is running out of storage for its crude oil, so the state energy firm closed 50 percent of its producing wells in the Loma Campana development.
Other companies, such as Vista Oil & Gas, have also reduced their production due to the crashing fuel demand in the country, Rio Negro reported.
At the end of last month, YPF warned that the mandatory nationwide quarantine had already slashed fuel demand in Argentina and said there were "difficult" times ahead for the company. YPF's executive president Daniel Gonzalez said in an internal company video seen by Reuters that Argentina's demand for gasoline had already plunged by 70 percent five days after the mandatory lockdown, adding that diesel demand had slumped by nearly 50 percent, and jet fuel demand had crashed by 90 percent.
"This will leave us with the need to export crude oil at low prices, with which our income will clearly be negatively affected," Gonzalez said in the video.
The crashing demand first led to refineries filling up their tanks. After stockpiles filled up storage in Argentina, it became clear that some production had to be reduced, according to the Rio Negro outlet.
So YPF moved to slash by 50 percent its oil production in Loma Campana in Argentina's key shale play, Vaca Muerta, where the Argentine state oil firm is partnering with U.S. supermajor Chevron. YPF produces more than 40,000 bpd at Loma Campana, and it is said to have agreed with Chevron to reduce oil production, Rio Negro reported.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More