Argentina Prepares for Oil IPO As Milei Reform Gets Underway | OilPrice.com
Argentine oil driller Petrolera Aconcagua Energia SA is gearing up to enter the country’s stock market to raise funds for expansion as President Javier Milei’s reforms start to attract capital back to Argentine markets, as reported by the Buenos Aires Times. Last month, Aconcagua disclosed its interest in bidding for aging oil fields being sold by state-run giant YPF SA to enhance its current production level of 13,500 boe/d. The specifics of whether the Petrolera exploration and production unit will list alone, or if the entire Aconcagua Energía group will be part of the upcoming IPO remain unclear.
There is a noticeable trend in Argentine credit and equity markets opening up as President Milei, a libertarian, initiates the deregulation of the country’s tightly controlled economy in his first year in office. Aconcagua is not the only company looking to go public, with New York-listed Corporación América Airports SA filing a prospectus last year to sell up to US$250 million of new stock in one or several offerings, resulting in a 66% jump in CAAP stock over the past year.
Javier Milei entered the political scene four years ago with a goal to disrupt the system, and now as President, he is implementing wide-ranging reforms. His reform package, consisting of over 300 articles, includes radical economic policies like lifting import controls, significant spending cuts, and devaluing the peso by over 50%. The bill has had mixed success, with the Chamber of Deputies approving it in general terms in February while the Senate rejected it the following month. Nonetheless, the bill has yet to be repealed and its fate remains uncertain.
Milei’s proposed reforms involve privatizing 41 state-owned companies, including YPF SA and Nucleoeléctrica Argentina, and deregulating the energy sector. By eliminating requirements to satisfy local market needs and allowing energy prices to align with international values, Milei aims to modernize Argentina’s energy industry. This move is seen as beneficial for companies like YPF SA and other Vaca Muerta oil and gas companies whose investments have been restricted by protectionist policies.
The Vaca Muerta shale play, located in the Neuquén province, is a significant asset for Argentina, holding vast reserves of oil and natural gas. Milei’s reforms could potentially unlock the full potential of Vaca Muerta and attract further investment from international energy companies. As the energy sector undergoes transformation under Milei’s leadership, the future of Argentina’s oil and gas industry looks promising.
In conclusion, Argentina’s preparations for an oil IPO amid Milei’s reform agenda signal a shift towards a more open and competitive energy market. The country’s energy sector is poised for significant changes that could attract investment and drive growth in the coming years, positioning Argentina as a key player in the global energy landscape.