Argentina President Cristina Fernandez de Kirchner named Miguel Galuccio, a former Schlumberger Ltd. executive, to head YPF SA after Congress approved the government’s seizure of its biggest energy company.
Galuccio, 44, was named general manager of Buenos Aires-based YPF late on May 4, one day after Congress approved Fernandez’s proposal to take a 51 percent stake in the company from Spain’s Repsol YPF SA. Galuccio, an engineer who was president of Schlumberger Production Management in London until a month ago, will hold the position at least until a shareholders’ meeting on June 4 elects a new board.
Fernandez is counting on Galuccio to help boost production and investment that she says suffered under Repsol’s ownership, vowing that the state-run company will be professionally managed. YPF’s American depositary receipts rallied 8.5 percent to $15.35 on May 4 after newspapers including Ambito Financiero and La Nacion reported that Galuccio would head the company.
“Clearly YPF is embarking on the path towards becoming a Petrobras or Petrochina, where there is a state controlling the entity and its long-term vision, however the entity is run according to best industry practices and in a method that delivers profitability,” said Roy Sebag, Chief Executive Officer of Natural Resources Holdings Ltd., which owns YPF shares. Sebag said he is “very satisfied” with the choice.
Galuccio, an Argentine who worked for YPF from 1994 to 1999, met with Fernandez for the first time on April 4, 12 days before the nationalization was announced, the president said in her speech. Galuccio had previously run the Integrated Project Management unit at Schlumberger, an oil-services company based in Houston.
“I said on April 16, when I sent the bill to Congress, that we were going to see YPF with a totally professional profile, which doesn’t mean that it won’t have a political direction,” Fernandez said in a nationally-televised speech. “The idea is for YPF to be modern, absolutely competitive, with professionals.”
YPF rose 2.6 percent to 87 pesos at 12:10 p.m. in Buenos Aires.
Galuccio, a petroleum engineer by training, ran Maxus Energy Corp., a U.S. company acquired by YPF in 1995, during his previous stint at the company.
Madrid-based Repsol has demanded $10.5 billion in compensation for the seizure, a figure the government rejects. Fernandez said Argentina’s National Appraisal Tribunal will set the value of the takeover.
The government took control of YPF as it seeks to reverse years of declining output and reserves and to cut fuel imports which doubled to $9.4 billion last year. Planning Minister Julio De Vido, who oversees energy policy, and Deputy Economy Minister Axel Kicillof were named by Fernandez on April 16 to run the company.
To reverse the decline in production, YPF is seeking partners to help it to tap Argentina’s extensive shale oil and gas reserves. A 30,000-square kilometer geological formation known as Vaca Muerta in southern Argentina holds at least 23 billion barrels of shale oil, of which about 13 billion belong to YPF, the company said in a presentation in February.
De Vido and Kicillof have since met with executives from companies including ExxonMobil Corp., Chevron Corp. and ConocoPhillips to discuss investments in Argentina.
“Argentina does not have much of a hydrocarbon deficiency, meaning that at some point, given its resource endowment which far exceeds internal demand, YPF will become a very profitable exporter of hydrocarbons,” Sebag said.
Following the seizure, Repsol has been left with a 6 percent stake in YPF. Argentina’s Petersen Group owns another 25 percent while the remainder is listed in Buenos Aires and New York.