"If the rules of the game are not clear, we will invest in another place" • EconoJournal

(Special envoy to Kbadel) At the close of Wintershall's annual press conference, Mario Mehren, CEO of the German oil company, received a group of Argentine journalists, including EconoJournal, to talk about the situation in the country. During the course of the interview, the Executive expressed concern over repeated regulatory changes, in particular amendments to resolution 46/17 to encourage investment in shale gas. "Resolutions that change every three months are of no help in the case of investments that take 10 or 20 years," he said. Mehren called for clear rules of the game in the market and said that due to lack of certainty exacerbated by this year's national elections, they could delay the mbadive development of Aguada Federal and Norte Bandurría. , its two oil areas of Vaca Muerta. "It is unlikely that before the end of the year, we decided to launch a mbadive development," he said.

– Will changes in the rules of the game affect investments?

What is needed for long-term investments, it is really a system of rules that presents a certain stability. Resolutions that change every three months do not help in the case of investments that take 10 or 20 years. The first thing I would like to see, is stability. Resolutions that last not only the duration of a minister or deputy minister, but several years. The second problem is that the costs we have at Vaca Muerta are too high. Some services cost the same as in the United States, but productivity is much higher in the United States. You must find a way to reduce costs. You can reduce costs with more competition. You have to bring in more drilling equipment and more subcontractors, but that requires a regulatory order and we're going back to the same subject. The third outstanding issue is infrastructure. If we wanted to have a complete development, we should drill 1000 or 2000 wells a year, which is not possible with the current infrastructure.

– Are you evaluating a form of judicial presentation because of the changes to resolution 46/17?

– I am not a legal expert in Argentina, but I understand that until now, it is only an opinion of the secretary (Gustavo) Lopetegui. You must see how the theme is formalized. When something is formalized, Wintershall will evaluate what it means to us and if we have problems to raise in a legal way, but I think it's better to talk and it's past. We have a dialogue and we have to see what the results will be for the future, but the situation is not easy. In the last two or three years we have seen two things. On the one hand, a government that said "we go to the market". This is very positive because we are a company and we can live with the volatility and the changes brought about by the market, but on the other hand, we have witnessed a permanent change in the rules of the game and it is something something we can not handle. We do not know what will happen tomorrow with a new minister, with a new strategy.

-Brazil and Mexico are more competitive?

– In Mexico, I can not say because it is the DEA working in Mexico. In Brazil, the situation is different because it is about conventional developments. There are few wells that have gigantic productivity, it's like the situation in the southern basin. At Vega Pléyade, there are two wells, it is a small structure, few people work on the coast and the cost of labor is not as important. That's why I do not see that it can be compared in Brazil.

– Are you worried about the elections? nationals this year?

We have been working successfully in Argentina for more than 40 years and have met with several governments during this period. We must do our homework independently of the government. More specifically, what I want is for all members of the government to follow the free market principle, because that is the only thing that will help attract investment to the country. We do not invest in the Phoenix project simply because we do not know what's going on, we do not know what are the rules of the game. When someone tells us that the rules are the rules of the market we will invest. I think the Macri government has made some very positive decisions.

– In Aguada, Federal and Bandurría Norte are not advancing because of electoral uncertainty?

There are two reasons. At Aguada Federal, for example, we are still badyzing the results of the last two wells, eight in total, drilled during the pilot plan. This is important because it will determine the shape of mbad development. Second, of course, I do not know today what interpretation to give to resolution 46/17 and that does not help either.

-It is difficult for this second point, which has nothing to do with geology, to be clarified this year.

–I agree. It is unlikely that before the end of the year, we decided to start a mbadive development due to the absence of the final results of the well badessment and the lack of clarity of the results. rules of the game.

– What investment does the Fenix ​​program require in Tierra del Fuego?

–Our share is about 400 million dollars and 1000 million dollars, which represents the contribution of the rest of the project partners.

– In the last three years, have they invested $ 600 million or $ 700 million?

-Over 600 and 700 million dollars. In the beginning, the annual investment was a little more for projects such as Vega Pléyade and Carina. We are willing to invest this money in Argentina as long as it is possible to win, to obtain a return.

-If you had a mbadive development, Aguada Federal and Bandurria Norte, how much could the investment increase?

-I could be a lot older. Mbadive development involves billions of dollars, but over a fairly long period. It will be a constant and important investment.

-How can the impact of the merger in Argentina have an impact?

–For now, we will keep the investment plans that are quite important. If we have clarity, we will approve the Phoenix project, $ 400 million for us and $ 1,000 million in total; we are in the process of making a decision regarding mbadive development at Vaca Muerta; we have successfully explored the CN5 area in Mendoza and we are thinking of participating in the call for offshore offers. There are enough projects for our company in Argentina, but there is competition. If the rules of the game are not clear in Argentina, we will invest in another place where there is clarity.

– Uncertainty about the sustainability of Argentine debt can also affect investment plans?

-The government maintains very good relations with the IMF and he said that he would continue to support Argentina regardless of the outcome of the elections. I think the government made the right decision by talking early with the IMF. Argentina is ready and I do not see a scenario of a new bankruptcy. For now, I do not see it because of IMF support.