Miguel Galuccio began by discussing YPF’s position previous to his taking over its leadership. Since 2003, the Argentina’s general economic growth was not followed by a surge in energy production. This, he explained, led a large increase in imports, which, in 2011, cost the state $11 billion. YPF had a decline in oil and gas production of 6 percent annually, but the largest sites of production declined at around 10 percent per annum.
What is the new model for the company? Asked Galuccio. It’s a model where the interests of shareholders is aligned with the interests of the state, he said. YPF brings value to shareholders by being listed on the New York stock exchange, on the Argentine bourse, and by honoring its commitments to share holders. It’s possible to align the objectives of a country with the objectives of a company, said Galuccio.
Galuccio explained the three pillars of YPFs strategic plan: High impact—to stop the decline of hydrocarbon production; secondly, a five-year growth strategy—to make YPF a leader in Latin America in unconventional energy resources and a global leader in the development of mature resource deposits; and thirdly, as a fundamental objective, is a new energy paradigm that will convert Argentina from a net hydrocarbon importer to an net exporter.
To grow in the value chain, you need to explore, and exploration requires investment, said Galuccio. To relaunch Argentina’s explorative strategy will require investment. YPF has to retake its historical role as the lead explorer in the country, he said. YPF will finish the year with around 50 exploratory wells. The company has stopped the decline in oil and gas, and will start 2013 without going down in production.
YPF needs to move from an exploratory phase to a production stage, said Galuccio. It will need technology and human capital, which already exists in Argentina. And it will need investment to be able to invest in economies of scale. Galuccio finished byb saying: “We are open to partners. They are welcome to work with YPF and welcome to work in this country.”
Watch a video of Miguel Galuccio's presentation: Part 1