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Argentina's Planning Minister Julio De Vido attends a meeting with Brazil's Energy Minister Edison Lobao in Brasilia April 20, 2012.
Credit: Reuters/Ueslei Marcelino
By Hugo Bachega
Fri Apr 20, 2012 5:02pm EDT
BRASILIA (Reuters) - Argentine Planning Minister Julio De Vido approached Brazil and its state-run oil company Petrobras on Friday to invite greater investment and collaboration with oil company YPF, which the government announced this week it would seize.
Brazilian Energy Minister Lobao responded after the meetings that Petrobras' investments in its southern neighbor would remain at roughly $500 million in 2012, unchanged from 2011. Although he did not dismiss Vido's call for Petrobras to double its oil and gas output in Argentina, he said it would only happen "in due time."
Argentina's request for investment in its energy sector highlights the risks involved in President Cristina Fernandez's decision earlier this week to expropriate YPF from Spain's Repsol.
Argentina's seizure of YPF comes after years of maintaining policies that left the country unattractive to the oil industry for investment. They include bans on exports of hydrocarbons and price controls that keep both oil and gas prices below international levels.
Vido said after a meeting with Lobao in Brasilia that he was optimistic Petrobras would come to an agreement with the provincial government of Neuquen, which suspended its concession rights earlier in April.
"We have the great challenge of doing business together, working in collaboration," Vido said, in a visit that is seen as an attempt to assuage Brazil's fears that Argentina plans to expropriate Petrobras assets after moving on YPF.
Petrobras certainly has something to lose. It has about 80 filling stations acquired with the purchase of Perez Companc's local assets several years ago. It also has oil and gas concessions in the Neuquen, La Pampa and Chubut provinces.
The Neuquen government revoked Petrobras' exploration rights on the grounds that it was not investing sufficiently to comply with its development commitment for the concession. Techint Group's Tecpetrol and Argenta Argentina also lost rights.
"Our intention is to invest as much as we can in Argentina," Lobao said, adding that raising its production in the country would involve investing "several billion" in coming years.
Petrobras has budgeted total investments of $224 billion over the next five years, most of which it is directed at Brazil's massive deepwater subsalt oil and gas reserves. Its CEO, Maria das Gracas Foster also attended the meetings.
Argentina's aggressive seizure of a controlling stake in YPF has drawn condemnation from Madrid to Washington and sparked warnings that investors could shun Latin America's No. 3 economy.
Lobao said Brazil accounted for 8 percent of Argentina oil and gas production, down from 12 percent in the past. Production could be expanded over time to 10 percent or as much as 15 percent of Argentina's output, as Vido is seeking.
Petrobras has stakes in 19 producing oil projects in Argentina and in 14 exploratory areas. It has had a presence in the country since 1993 and produced 102,000 barrels of oil equivalent per day in 2011.
Vido is the temporary government-appointed administrator of YPF. He said he would make contact with other foreign oil companies next week such as Exxon, Chevron and ConocoPhilips to seek to attract more investment in oil.
(Reporting by Hugo Bachega; Writing by Brad Haynes; Reese Ewing; Peter Murphy; Editing by Gerald E. McCormick and Marguerita Choy)
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