Could you provide some information about Gas y Petróleo del Neuquén (GyP), including when and why it was founded, and what its mission is?

The government of the province of Neuquén in Argentina established GyP in 2008 with the purpose of supplying the country’s energy needs by exploring and exploiting Neuquén’s hydrocarbon resources. GyP was founded when oil prices were at $32 per barrel, and exploration and production (E&P) companies were relinquishing their areas. To entice E&P companies back, Neuquén created GyP and assigned it as the owner of the blocks that the companies had relinquished. GyP was tasked with finding partners to explore and eventually exploit the blocks over which it holds exploration concessions. GyP has entered into joint ventures with numerous companies, including YPF, ExxonMobil, Shell, Total, and Wintershall. However, GyP’s strategy is not to be an operator itself. The company hires qualified personnel to manage its relationship with its E&P partners, with a veto right over all project decisions.

How does GyP help both the province of Neuquén and the operators with which it partners?

GyP provides advice to the provincial government on business and technical issues such as settling land ownership disputes and selecting an oilfield service company. GyP has a good relationship with the province and acts as a facilitator for E&P companies operating in Neuquén. GyP organizes and participates in workshops where its partners discuss common issues like logistics, drilling, human resources, and landowner relations. GyP helps manage disputes between landowners and operators by mediating between the two parties. GyP is an effective mediator due to the relationship it has with both parties, with landowners understanding that GyP represents the state and E&P companies knowing that GyP understands their concerns.

What challenges does land ownership pose for E&P, and how does GyP help manage these challenges?

In Argentina, the government owns hydrocarbon resources, but not necessarily the land. Landownership can be a complicated issue since private entities and the government can own it, and residents have lived on state-owned land without formally owning it for years. GyP helps manage disputes between landowners and operators. Given GyP’s relationship with both parties, it acts as an effective mediator. Landowners realize that GyP represents the state, and E&P companies know that GyP understands their concerns.

What challenge does infrastructure in Argentina pose for the development of the local oil and gas industry?

Argentina needs to make massive investments in infrastructure to cope with intensifying oil and gas production. The challenge will be to overcome the vicious circle that hampers infrastructure investment. Without production, there is no money; without money, there is no infrastructure investment; and without infrastructure, there is no production.

How important was Governor Sapag in fostering the partnership between GyP and ExxonMobil, and how important will it be to continue personally courting partners?

Governor Sapag was crucial in creating GyP and convincing companies such as ExxonMobil to invest in Argentina. From 2008 to 2010, it was challenging to convince companies to invest in exploring the blocks that they had relinquished. The first bidding round yielded only about $180 million. However, Governor Sapag successfully wooed ExxonMobil and XTO Energy during his trip to Houston. Today, companies regularly come to GyP asking about the remaining blocks that are not yet contracted. However, approximately 70% to 80% of the blocks in Neuquén are already contracted.