Pampa Energia sells TGS shares to finance the acquisition of Petrobras Argentine subsidiary

Marcelo Mindlin, main shareholder of Pampa Energia is looking for funds to acquire the Argentine subsidiary of Petrobras. He needs nearly US$ 1,200 million to get the assets that Petrobras Argentina (PESA) has in the local market. In this context, the owner of Pampa Energía offered for sale the shares he has in Transportadora Gas del Sur (TGS) where it holds 25% of CIESA, the controlling company of TGS. The remaining shares of CIESA belongs to Petrobras. CIESA is the owner of 53% of TGS, while the other 47% is listed in the stock exchange. The impossibility of reaching the control of TGS leads Mr. Mindlin to get rid of his shares, obtaining a sum of US$ 250 million with this transaction. Adding this to the US$ 500 million that he hopes to achieve with the launching of certain securities approved by the National Securities and Exchange Commission will represent a good start for his landing in PESA. The cash balance of Pampa Argentina will also  contribute with US$ 300 million. He is also considering a loan from several international banks.

Currently he is under an exclusivity period to negotiate for the acquisition of the 62.7% of PESA, while the remaining 37.3 is listed in the stock exchange. The target operates a refinery in Bahía Blanca, more than 100 service stations, shares in TGS, the thermoelectric station Genelba and the hydroelectric Pichi Picún Leifú, and several petrochemical plants in Bahía Blanca and Santa Fe. This are the remaining assets of Petrobras in Argentina, after the purchase by Cristobal Lopez in 2011 of the refinery in San Lorenzo and 365 service stations, per US$ 110 million.


The government will subsidize oil companies in Chubut if Brent barrel does not increase over US$ 47.5

The Ministry of Energy and Mining, directed by Juan José Aranguren, issued Resolution No. 21, by which they explained the conditions for the incentive of US$ 10 per barrel that is shipped abroad from the San Jorge Gulf Basin, of which US$ 7.5 will be provided by the Treasury, while the other US$ 2.5 will be in charge of the province of Chubut, as long as the Brent barrel is bellow US$ 47.5. Although originally it was meant to last only six months, finally it will cover the whole year. The subsidy will not generate any royalties for the province.

The purpose of the program is to maintain the 20% of the production of Escalante barrels in San Jorge Gulf Basin that has to be exported since it exceeds local refineries. Unions were claiming that without a program like this, the decrease of oil prices would have leaded to the loss of 5000 jobs.

Notwithstanding that the subsidy is not enough for the companies to ride out the differences with the local price of Escalante that is around US$ 55, there was an agreement of all the involved parties to keep the jobs and delay salary negotiations.

The government prepares a new stimulus program for gas production

The Ministry of Energy and Mining, directed by Juan José Aranguren, is eliminating the details of a new program of incentives for the production of gas. The initiative will be announced once that the new tariffs charts and wellhead prices are available, which is most likely to happen once the congress approves the payment to the holdouts. The stimulus program will allow companies to file projects to be evaluated by the Sub-secretariat of Exploration and Production, in charge of Marcos Porteau, which will authorize a differential price for gas. In practice, this will imply a direct subsidy from the State to the companies in order to encourage investments in complex deposits like in shale or tight gas.
The main difference with the previous Stimulus Program for Additional Gas Injection (known as Plan Gas) is that the latter only allowed the differential price when the offer was over certain agreed baseline, while in the new one they plan to make an analysis on a case by case basis. This means that companies do not have to negotiate with the government any particular baseline but rather that should focus in the details of the project (in most of the cases for unconventional production) that is being filed. The objective is to get to the prices that each company needs to develop each of the deposits of shale and tight gas. According to the Minister, the previous scheme leaded to large sums of subsidies that exceeded the capacity of the State. In fact, the government is planning to cancel a debt of US$ 1.700 million it has with certain companies due to the previous program (YPF, PAE, Total and Wintershall among others) by issuing bonds (Bonar 2018 and 2024).