Miguel Galuccio is showing the strain. He took over as chief executive of YPF a year ago, just after the Argentine government had nationalised the 51 per cent stake in the Argentine national oil company owned by Repsol of Spain. It was an unenviable task, even for such a respected engineer.
Argentina is, in many ways, a hostile environment for business, given its exchange controls, high inflation and cumbersome bureaucracy.
Yet since Mr Galuccio took over at YPF 18 months ago, the company’s share price has doubled, investment has risen from $2bn in 2012 to $5bn this year and exploration activity has increased threefold.
Mr Galuccio has also managed to turn round falling production in both oil and gas – YPF has suffered a drop in hydrocarbon output of 7 per cent on average over the past decade.
In addition, he led a $150m bond issue in New York in September, despite Argentina’s ongoing battle with creditors, who have often sought to impound sovereign Argentine assets abroad.
No wonder, then, that the 45-year-old is looking wan – it probably does not help that he is just off an overnight flight from Europe, where he was courting investors to develop Argentina’s vast shale reserves.
“I’m very pleased with YPF’s results,” he says, adding – about the company, although he could just as well be talking about himself – “we have to be careful not to overdo it.
“The key is to grow profitably without destroying value,” he says, playing the role of shareholder value-conscious chief executive rather than government placeman.
Central to Mr Galuccio’s strategy is the plan to tap the immense Vaca Muerta shale reserves, much of which lie in Mendoza, alongside the state’s sizeable conventional oil resources
Mendoza’s conventional reserves account for about a fifth of YPF’s oil production, and it is home to one of the country’s most important refineries. “It is the only province in Argentina that is completely [energy] integrated,” says Mr Galuccio.
Although he concedes that it could take several years before development starts in Mendoza’s portion of Vaca Muerta, as opposed to the share in the neighbouring state of Neuquén, the province remains a vital cog in the workings of YPF.
One of the biggest challenges, however, is securing funding. Hence the importance of September’s bond issue. “It was something small to test the waters,” says Mr Galuccio of the $150m sum.
YPF was able to raise the money at less than 8 per cent, compared with double-digit rates on the country’s sovereign debt.
YPF has also been raising debt locally at even lower interest rates. About half of YPF’s debt is in local currency, compared with as much as 90 per cent in foreign currency before the nationalisation.
However, perhaps Mr Galuccio’s most significant achievement has been to secure a $1.2bn deal with Chevron to explore and develop a concession in Vaca Muerta.
It was trumpeted as proof that a large international company with shale gas experience trusts Argentina. YPF hopes the deal will encourage other companies to follow suit. Dow, the US chemicals company, has since signed a smaller deal.