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Interview

Jorge Vugdelija – CEO, Oleoductos del Valle, Argentina

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The CEO of Oleoductos del Valle, Argentina’s largest transporter of oil, explains how the change in government has affected the state-controlled business and highlights employees as the company’s main differentiator.

Could you please introduce yourself to our international readership?

“Our current capacity exceeds the current transport needs, the upside however is that as an increase of production is expected in the short-term future it won’t be difficult to receive that new production.”

I am the general manager of Oleoductos del Valle (OLDELVAL), a company that transports oil from the Neuquén basin to the big consumer centers. The pipeline system started its operations about 55 years ago as part of YPF, which at that time, was still a state-owned company. Later, in 1993, OLDELVAL was incepted as result of the privatizations in Argentina’s energy sector. 70 percent of the shares went into an international tender; the other 30 percent were kept by YPF. Today OLDELVAL has six shareholders: YPF, Pampa Energía, Chevron, Pluspetrol, Pan American Energy, and Tech Petrol. Before assuming position as general manager for OLDELVAL, I was working for the Pampa Energía group. No company has sole control over Oleoductos del Valle; decisions are consensual and in general we try to reach agreements.

Which are the main characteristics of the OLDELVAL System?

We have 1,700km of pipelines; the trip is about 800km, but the pipelines have double and triple sections, which in total accumulate to 1,700km. OLDELVAL’s pipelines extend over four provinces: Neuquén, Río Negro, La Pampa and Buenos Aires, where the main destination of the oil we transport is located, the OilTanking Bahía Blanca Terminal.

The system has 16 pumping stations among headers, intermediates and terminals and we are currently transporting a daily oil volume of about 21,000-22,000m3 per day. The system was designed for a much bigger volume; it basically worked with twice that capacity. Therefore, our current capacity exceeds the current transport needs, the upside however is that as an increase of production is expected in the short-term future it won’t be difficult to receive that new production.

How is OLDELVAL preparing for an increase in transport needs associated with Vaca Muerta production?

We are currently developing what we call “The Capacity Increasing Stairway”. Starting from available projections for the near future of Vaca Muerta´s oil, this capacity increasing roadmap defines required transport system investments for each step in the basin’s production. The existing OLDELVAL transport system provides the ideal platform for capacity growing at the lowest cost since there are many synergies. We are working on this very close with the authority responsible for application.

Moreover, we are currently offering OLDELVAL transport services to the new Neuquén basin facilities in addition to our transport services. We believe that, since we are a company that has strong technical and geographical knowledge of the region, we can add value to the new companies in Vaca Muerta, operating their new pipelines connecting radially to OLDELVAL.

Which is the main challenge to overcome in that transport capacity-increasing plan?

I would say that it is absolutely necessary to work in a different scheme going from the current Open Access to a new one that includes Open Seasons for capacity selling. We are working in that direction already; it is a key factor in being able to transport the increased production from the basin.

How would you define the mandate of your department?

OLDELVAL is a company with a regulated national concession to transport a natural resource; it has different interested parties. Beside the oil producers, we have the Ministry of Energy, the application authority, and the energy departments of each of the four provinces. Our main objective is to provide the system with the highest reliability and efficiency, as well as provide a transparent operation to gain the different parties’ confidence. With this statement, we have an inside agenda which consists of improving our management and efficiency. This involves improving some aspects of the facilities to technically enhance efficiency and effectiveness. Having a national state concession for 35 years, the fares we charge our clients are regulated by the national authorities and naturally one of the tasks included in the mission of the general manager of this company is to manage that process correctly. Argentina comes from a period in which regulated businesses did not work efficiently. Now, things have been changing and we are working to optimize companies’ processes; this means that the fares have to be adjusted in line with the services that we provide.

Having these different owners, is it challenging to satisfy all of them?

It is not a difficult task to combine the interests of our owners they are customers and owners at the same time and thus share the demand for a very good service at a very good price.

Why are you the right partner for these companies?

Because we provide solutions. Our employees are a major differential, we have highly experienced staff that can operate and maintain this pipeline system with a genuine track record of excellence. All this knowledge will be available for our customers too. It’s a matter of choosing the right people that will help you when facing a challenge—and we have the right people!

Now that you’re looking for new partners internationally, what message do you have for our readers and possible future partners?

The message for the new players of Vaca Muerta is that OLDELVAL is a company that was, is, and always will be here. A company with knowledge about the evacuation of petrol from the Neuquén’s Vaca Muerta basin. Knowledge which can be transformed into added value for all companies starting exploration in the basin. We will provide solutions. We are a company with tangible assets in the country; we are here and have the know-how to manage them and that know-how is available for all of our clients.

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