Vaca Muerta: worries the lack of dollars after the agreement with the IMF 

The first understanding with the International Monetary Fund (IMF) to restructure the debt of around 45,000 million dollars did not cause much enthusiasm among the oil companies of Vaca Muerta and industry analysts who remarked that until you know the fine print of the agreement you can not carry out a very deep analysis. 

While they stressed that it generates some predictability, they warned that it is "vital" that the government achieves an internal consensus. 

Energía On consulted the main operating companies of unconventional formation on the prospects of the pre-agreement and stated that what worries them most is how access to foreign exchange will be, mainly taking into account the IMF's demands to accumulate more than 5,000 million dollars of reserves that could translate into a scenario of greater restriction. 

"According to the agreement, the Central Bank will have to generate an extra floor of 5,000 million dollars of reserves. So a question that is generated is whether that will translate into some kind of limitation, for example, if companies will be able to access dollars to the Single and Free Exchange Market to repay loans abroad or turn foreign currency in the case that it is possible, "they said from a company with assets of Vaca Muerta. 

In numbers

US$ 5,000 million is the extra floor that the Central Bank will have to generate as requested by the International Monetary Fund. The first reaction of the local market was positive, immediately after the announcement of the general understanding – as defined by the IMF itself – the shares of Argentine companies rose. An indication that, at least, it is considered that the worst scenario that implied not achieving any rapprochement between the parties was cleared of the equation. "What the industry is mainly interested in is the issue of access to foreign exchange. 

That is a structural factor that must be solved and it is what will move your needle when it comes to getting the funds to sustain and above all increase investments in an industry that is capital intensive, "they said before the consultation of this medium from another company that operates in the formation in strict off the record. 

“What the industry is mainly interested in is the issue of access to foreign exchange. That is a structural factor that needs to be resolved."Oil company with assets in Vaca Muerta. 

"There is a reading that is very fast and that is that the agreement with the IMF implies some normalization of a macro variable that would allow you greater access to credit. That is the part that companies can find as positive," they shared from another firm. 

The reading of the consultants specialized in the sector is almost in the same line as what the companies in Vaca Muerta expose. In one of the latest reports of the consulting firm Economía y Energía, directed by Nicolás Arceo, it is stated that, since the fine print of the understanding between the parties is not known, only preliminary analyses and evaluations can be carried out, however, it is a fact that the economy will continue to face a harsh external limitation to finance its growth and the reason is the fata of dollars. 

"Following the numbers of the external sector for 2022 proposed as a base scenario and the objective of accumulation of reserves proposed by the agreement (+ USD 5,000 MM), the situation in relation to the space to grow is not modified. The economy continues to face a severe external constraint to financing its growth: there are no dollars," the report says. 

If there is one thing that vaca Muerta projects have demonstrated in recent years, it is the resilience to grow even when the context is adverse and also the ability to reduce costs and create competitive developments with high levels of efficiency. 

The learning curve did not stop polishing since the first well was drilled and in the last year the shale was the one that put on the shoulder the recovery of the production of the whole country. 

However, the main obstacle facing the developments of Vaca Muerta today is the lack of infrastructure, expensive projects that require several months of construction. So you can not expect a leap of scale in the level of annual investments – fresh dollars that the country needs – because in the gas segment the ceiling has already been reached and in the oil segment it would be reached this year. 

“The agreement would allow some short-term external relief, as a result of the refinancing of maturities with the fund, and the contribution that the IMF would make of US$ 4,500." Nicolás Arceo, Dir. Economics and Energy Consultant. 

"The agreement is a sign that Argentina knows how burdensome it is not to have an understanding with the IMF and the restrictions that this implies. However, a plan is needed to reduce the deficit and be able to grow at the same time, it is not easy, especially considering that the country does not generate confidence in international markets which distances investments, "analyzed a director of a company with assets in Neuquén. 

Internal noise 

The lack of enthusiasm on the part of companies and analysts also has to do with the fact that the agreement must still be approved by the fund's board of directors, and, also, it must go through the Congress of the Nation, where in addition to negotiating with the opposition, the internal differences of the ruling party itself must also be ironed out.

"The government's announcement generates a certain predictability and is something that the industry always values, and always reacts with the request that what is needed is predictability. Now it is also extremely important that the agreement must have an internal consensus, not only with the opposition, but also with its own ranks," they said from an oil company. 

First with his silence and then with the letter in which he enunciated his resignation from the presidency of the bloc in Deputies, Máximo Kirchner, the main reference of La Cámpora, made clear the rejection of the negotiations with the fund. He assured that not only does he not share the strategy used by the economic cabinet and negotiators who "answer" to the president, but also the results of the principle of agreement. 

In a television interview Alberto Fernández said that he asked the leader of La Cámpora not to resign, but the truth is that the decision was already made, even before the announcement made by the president on January 28. A decision that was also questioned by the Minister of National Security, Aníbal Fernández.

"The decision that Máximo (for Kirchner) made running the way he did, being that he is the most important reference of La Cámpora, generates noise and muddies the court and is not precisely what is needed at this key moment," said the executive of a firm.

 RN