Reports indicate that YPF SA, the state-run oil firm of Argentina, is holding talks with US-based General Electric with a view to selling its 49% stake in a power generation subsidiary to the conglomerate. A spokeswoman for General Electric and a spokesman for YPF refused to comment on the reports which appeared in a local Argentinian newspaper, Clarin.
Currently the two firms are collaborating on a couple of electricity projects being carried out in South America’s third-largest economy. Some of the projects are situated in Tucuman Province and others are close to the shale field of Vaca Muerta.
A week ago, YPF and General Electric revealed that they had managed to secure $220 million in project financing for two Argentinian thermal power projects. The two projects are the Loma Campana II which has an electricity generation capacity of 107 megawatts and Tucuman which has a power generation capacity of 267 megawatts. Export Development Canada, Credit Suisse and Citi led the financing jointly. The financing is the first for an electricity plant in the South American country in two decades.
“GE’s technology, global reach and capital expertise enabled a successful outcome for Argentina’s initial fast power tender and for an important GE customer, YPF,” the managing director of General Electric Energy Financial Services’ Global Capital Advisory, Bob Psaradellis, said.
Currently the two projects are more than halfway complete. The Tucuman project is expected to start commercial operations next year in February. A General Electric 9F.04 gas turbine will be used to power it. With regards to Loma Compana II project, commercial operations are expected to start later this year in December and the General Electric LMS 100 gas turbine will power it.
In the first 10 years after the start of commercial operations, each of the projects will enjoy a power purchase agreement that will run for 10 years. The PPA will be with Compañía Administradora del Mercado Mayorista Eléctrico SA, the wholesale power market administrator controlled by the government.
The awarding of the power purchase agreements was done last year as part of Argentina’s efforts to replace inefficient and expensive power generation capacity as well as increase the reserve margin of the country’s power. Argentina’s current president, Mauricio Macri, has also put in place new energy policies and reforms with a view to raising the power supply in the country as well as diversifying the energy mix.