YPF Sociedad Anónima Stock

YPF Sociedad Anónima (YPF) operates as an energy company.

The company operates a fully integrated oil and gas chain with leading market positions across the domestic upstream, downstream and gas and power segments. YPF operates mainly in Argentina.

The company’s revenues are primarily derived from the sale of fuels (gasoline and diesel) and natural gas in the Argentine local market, which together represented 66.1% of total revenues in 2022.

Business Strategy

The company’s strategic pillars include focusing on the development of the company’s unconventional hydrocarbon acreage with competitive advantages, generating value in a sustainable way; efficiency in processes in all business segments, and particularly in the Vaca Muerta formation, with the aim of ensuring resilience even in low price scenarios; the rationalization of the conventional asset portfolio, prioritizing profitability through the incorporation of technology and innovation to gain efficiency; the adaptation of refineries to facilitate greater shale processing and the expected evolution of the quality of fuels to be demanded by the company’s customers; and the reduction of the company’s specific CO2 emissions and the development of renewable energies through the company’s participation in YPF Energía Eléctrica S.A. (‘YPF EE’), as part of the company’s commitment to sustainability.

During 2022, the company continued to work based on its corporate sustainability policy and the company’s commitment to climate change-related actions.

Upstream

The main strategic pillars of Upstream business are:

Within the company’s unconventional operations, the search for operational efficiencies in well construction continues to be a fundamental factor in the development of Vaca Muerta. One of the main drivers behind capital efficiency has been extending the length of horizontal branches. During 2022, the longest slim well to date was drilled, reaching 4,253 mts of lateral branch, all the while the company also drilled the longest ever lateral well with regular pipe design, reaching 4,447 meters. In addition, along the year the company achieved significant improvements in drilling speed. Another key factor in reducing development costs is the hydraulic stimulation speed. In this aspect, 2022 was also a year of great progress having consolidated the implementation of simul-frac technology, which consists of stimulating two stages simultaneously. This significantly reduces the completion time required for a well. During 2022, the company achieved the record of 20 stages stimulated by fracture set in one day in the Loma Campana block. Combining the extension of horizontal branch length together with faster drilling and stimulation speeds are key to drive improvements in well construction efficiency.

Within the company’s conventional operations, operating costs containment is the company’s primary objective, followed by the stabilization of the company’s oil production, primarily through the introduction of enhanced oil recovery (EOR) techniques. The company carries out a systematic plan to identify initiatives that allow cost reduction and contribute to generating a portfolio resilient to different macroeconomic scenarios. Likewise, the company is transforming its operating model through the implementation of new agreements with the company’s suppliers and contractors, which should allow the company to achieve the levels of production, profitability, efficiency and productivity the company requires.

In addition to the specific priorities managed by the company’s upstream units, the company is focused in increasing its resource base through the execution of exploratory activity: YPF maintains its spirit of exploration and growth, seeking to venture into high-impact projects that should generate value for the company’s stakeholders while promoting economic development in Argentina.

Downstream

The main strategic pillars of Downstream business are:

Within the midstream oil unit that has been created within the company’s Downstream business, the company shall focus on leading the different infrastructure projects that will enable future production growth out of Vaca Muerta, primarily including the expansion of existing facilities such as the Oldelval pipeline system that connects Vaca Muerta with Puerto Rosales, in the Atlantic coast, and the Oil Tanking Ebytem port terminal; the completion of the new Vaca Muerta oil pipeline connecting the core-hub blocks with the existing OTA/OTC trans Andean pipeline into Chile; and the engineering, construction and operation of a new pipeline and port terminal, Vaca Muerta Oil Sur, to further enlarge evacuation capacity in coming years.

Complete the multi-year investment related to the revamping of the company’s refining units to adapt them to the new mix of crude oil containing a larger portion of lighter crudes coming from Vaca Muerta, and the demand for products with lower sulphur content.

Increase the competitiveness of operations, through a comprehensive plan to capture efficiencies and the deployment of new technologies, which allow improving the reliability and safety of the company’s industrial and logistics facilities and maintaining high quality standards in the company’s processes.

Enhance the value generated in key channels, focusing marginal investments and resources on maintaining the company’s market share with healthy profitability.

Develop regional markets, leveraged in the best geographical positioning, through the available logistics infrastructure and strategic alliances.

Gas and Power

The main strategic pillars of the company’s Gas and Power business are:

Given the nature of the natural gas business which requires capital-intensive infrastructure to address opportunities in the global markets, the company’s strategy in coming years will continue to be limited to the development and monetization of the company’s gas portfolio based on local demand as well as some potential growth opportunities by exporting to neighbor countries taking advantage of idle capacity in existing pipelines. The Plan Gas program established by the Argentine Government in late 2020 offering medium-term off-take contracts at fixed prices, which was further extended and expanded in 2022, was key to provide predictability and orderly competition in an otherwise very complex market given the marked seasonality in local natural gas demand between summer and winter periods. However, the vast shale gas recoverable resources available in the company’s Vaca Muerta concessions and the proven efficiency already achieved in those operations provide for a unique opportunity to expand the company’s strategy for the medium and long-term in search for expanded activity oriented at global markets of liquified natural gas (LNG). To that end, the company will devote resources in the near future, both human and capital, to analyze both technically and economically the viability of a large scale LNG plant that could prove to be a way to further grow the company’s natural gas business.

Advancing the relatively limited growth opportunities in the company’s natural gas business in the short-term, as well as the full potential in the medium to long-terms, require the development of an efficient and well planned midstream network. A well planned and efficient midstream network shall successfully enable the evacuation and processing of the incremental production coming from unconventional projects, which to a large extent produce richer gas. To this end, the company has identified projects that include construction, expansion and/or resolution of bottlenecks in the evacuation system and in natural gas processing that would enable greater daily production. And in the medium to long-terms, a potential large-scale LNG project would require new midstream infrastructure that shall include a dedicated natural gas pipeline connecting the upstream operations in Vaca Muerta to the location of the potential LNG plant, likely on the Atlantic coast, as well as new facilities for gas processing and liquids separation.

On the power business side, the company aims at consolidating its position as one of the main electric power generators in Argentina, with a particular objective of growing the company’s renewables’ portfolio, taking advantage of the world-class natural resources for wind and solar renewable generation in the country. Having incorporated in recent years greater installed generation capacity through YPF EE, mainly from renewable sources, the objective is to continue consolidating its position as one of the main electricity generators, and more particularly, in the renewables space, through the completion and commissioning of new utility-scale wind and solar projects. In this sense, YPF EE has started the construction of the first stage of the Zonda solar farm for an installed capacity of 100 MW, expecting it to be ready for commercial operation in the second quarter of 2023.

As of December 31, 2022, the company conducted the company’s business according to the following organization:

Upstream business segment, which includes all activities related to the exploration, exploitation and production of oil and natural gas:

As of December 31, 2022, the company held interests in 116 oil and gas fields in Argentina. In 2022, these assets accounted for 38.8% of the Argentina’s total production of crude oil, excluding NGL, and 33.2% of its total natural gas production, including NGL, according to the SE.

Downstream business segment, which consists of the company’s refining, marketing, chemicals, logistics and trading divisions:

The company is Argentina’s leading refiner with operations conducted at 3 wholly-owned refineries with a combined annual refining capacity of 119.7 mmbbl (328.1 mbbl/d). The company also owns a 50% equity interest in Refinería del Norte S.A. (‘Refinor’), an entity jointly controlled with Hidrocarburos del Norte S.A. (a company wholly-owned by Integra Capital S.A.) which has a refining capacity of 26.1 mbbl/d.

The company’s retail distribution network for automotive petroleum products as of December 31, 2022, consisted of 1,658 YPF-branded service stations, which represent 35.1% of gasoline service stations in Argentina, of which the company operates 157 through the company’s wholly-owned subsidiary Operadora de Estaciones de Servicios S.A. (‘OPESSA’).

The company is one of the leading petrochemical producers in Argentina and in the Southern Cone, with operations conducted through the company’s Ensenada Industrial Complex (‘CIE’) and Plaza Huincul Complex. In addition, Profertil S.A. (‘Profertil’), a company that the company jointly control with Agrium Holdco Spain S.L. (a company wholly-owned by Nutrien Inc.), is one of the leading producers of urea in the Southern Cone.

Gas and Power business segment, which includes the activities of transportation, commercialization and distribution of natural gas; operation of regasification terminals; conditioning and processing and separation of natural gas; and power generation:

The company is the largest producer of natural gas in Argentina with total natural gas sales of 13,713 mmcm in 2022, accounting for 29.0% of the market (market share calculated through December 2022, as provided by Ente Nacional Regulador del Gas (‘ENARGAS’)).

The company also distributes natural gas through the company’s subsidiary Metrogas S.A. (‘Metrogas’), a natural gas distribution company in the Capital region and southern suburbs of the Buenos Aires Province, and one of the main distributors in Argentina. During 2022 Metrogas distributed 6,773 mmcm (or 238.8 bcf) of natural gas to 2.5 million customers.

YPF is the operator of UT Escobar (a joint venture with Energía Argentina S.A. (‘ENARSA’)), which operates a LNG regasification terminal (‘LNG Escobar’) located in Escobar, in the Buenos Aires Province, since 2011. Also, during 2022, the company provided the regasification service at Bahia Blanca terminal.

The company participates directly and, mainly through YPF EE, in 21 power generation plants, with an aggregate installed capacity of 3,091 MW. The company also has a 50% interest in CT Barragán S.A, which inaugurated, in January 2023, the expansion of the Barragán Thermal Power Plant with the closure of the combined cycle which adds 140 MW to YPF installed capacity.

In 2022, certain assets related to the transportation, conditioning, and processing of natural gas for the separation of gasoline, propane, and butane, previously managed by the Upstream business segment, have been grouped into a new operation called ‘Midstream Gas’ within the Gas and Power business segment, with the main intention of facing the challenges resulting from the development of the Vaca Muerta formation in terms of transportation and processing of natural gas, allowing the debottlenecking of the transportation and processing of natural gas required to maximize the NGLs value.

Central Administration and Others, which consists of the company’s remaining activities.

The company’s operations, properties and clients are mainly located in Argentina. However, the company also holds participating interests in exploratory areas in Bolivia and sell jet fuel, natural gas, lubricants and derivatives in Chile and lubricants and derivatives in Brazil.

Upstream

YPF’s Upstream business segment seeks to add value to the company by optimizing the use of deployed capital, achieving levels of operational excellence and enhancing the productivity of mature fields, thus generating new development opportunities and softening the decline of mature fields, while delivering profitable growth driven by the increasing incorporation of unconventional projects to its activities.

In 2022, YPF continued actively managing its portfolio.

Acreage

The company’s production is concentrated in the following basins in Argentina: Neuquina, Golfo San Jorge, Cuyana, Noroeste and Austral.

Exploration & Development activity in Argentina

Exploratory activities

During 2022, the company’s main exploratory activities had the following principal focus:

Onshore

Operated areas

Unconventional activities

Neuquina basin

During 2022, the company’s exploration and appraisal activity in the Vaca Muerta formation took place in the following areas: in the southern part of the basin, within the boundaries of the Loma La Lata - Sierra Barrosa conventional concession; in the southwest part of the basin, in the Las Tacanas block; in the northern part of the basin, in the Narambuena block; in the Río Neuquén block; and in the Rincón del Mangrullo block.

Conventional activities

Neuquina basin

In the Cerro Manrique block, having fulfilled all commitments in 2021 for the first exploratory period, the company decided to continue with the second exploratory period and subsequently informed the Neuquén Province of this decision, which was granted during 2022. The second exploratory period expires in September 2024.

In the Malargüe block, as of December 31, 2022, the company is still awaiting response from the Mendoza Province regarding the company’s notification from 2019 informing the Province of the company’s decision to relinquish the block, having fulfilled all commitments in the block and considering the results obtained.

In the Chelforó block, during 2022, the company sent a notice to the Río Negro Province requesting a deferral of the expiration date of the second exploratory period. The deferral was granted, and the new expiration date is April 2023.

In the CN-VII/A block, during 2022, the company sent a notice to the Mendoza Province requesting a deferral of the expiration date of the first exploratory period. The deferral was granted, and the new expiration date is August 2023.

Cuyana basin

In the CCyB 17/B block, as of December 31, 2022, the company is still awaiting response from the Mendoza Province regarding the notification sent in 2018 informing the Province of the company’s decision to relinquish the block, having fulfilled all commitments in the block and considering the results obtained.

Austral basin

In 2022, the company sent a notice to the Tierra del Fuego Province requesting a deferral of the expiration date of the first exploratory period of the CA-12 Bloque 1 block. As of December 31, 2022, the company was awaiting response.

In the El Turbio block, having fulfilled all commitments for the first exploratory period and considering the obtained results, the company decided not to continue with the second exploratory period. Consequently, in 2022, the company sent a note to the Santa Cruz Province informing the company’s decision to relinquish the block. As of December 31, 2022, the company was still awaiting response.

Non-Operated areas

Conventional activities

Golfo San Jorge basin

In the El Tordillo block, 1 workover carried out on a gas well by Tecpetrol S.A. (‘Tecpetrol’) in 2021 was abandoned as it showed negative results.

Offshore

Operated areas

Conventional activities

Argentina Norte basin

In 2021, the company sent a notice to the SE requesting a deferral of the expiration date of the first exploratory period of the CAN-102 block, due to the consequences of the outbreak of the COVID-19 pandemic. The deferral was granted for 12 months (from November 2023 to November 2024) with the possibility of a deferral of 12 additional months if requested. In 2022, the SE granted a deferral for 12 months of the first exploratory period of the CAN 102 block.

Non-Operated areas

Conventional activities

Argentina Norte basin

During 2021, Equinor (operator of the CAN 100 and CAN 114 blocks) and Total Austral S.A. (operator of the MLO 123 block) sent a notice to the SE requesting a deferral of the expiration date for the first exploratory periods of the above-mentioned blocks due to the consequences of the outbreak of COVID-19 pandemic, and the SE granted the deferrals for 12 months for each block: CAN 100 (from April 2023 to April 2024), CAN 114 (from November 2023 to November 2024) and MLO 123 (November 2023 to November 2024), with the possibility of a deferral for 12 additional months if requested. In 2022, the deferrals for 12 additional months were granted in the CAN 100, CAN 114 and MLO 123 blocks.

Seismic activities

During 2022, seismic studies were carried out in the Santa Cruz and Tierra del Fuego Provinces. Seismic 2-D data covering 1,102 km was recorded in the El Turbio block (operated area) in the Santa Cruz Province, and a 2-D seismic data covering 704 km was also recorded in the CA-12 block in the Tierra del Fuego Province.

Development activities

During 2022, the company’s main development activities had the following principal focus:

Unconventional activities

YPF continues to lead unconventional development in Argentina.

During 2022, the company, together with its partners, continued with its growth plan with more than 5,500 frac stages carried out in blocks operated by YPF.

In the Vaca Muerta formation, the historical peak of oil production was reached in blocks operated by YPF: 76.7 mbbl/d in December 2022 (net YPF). Additionally, in 2022, the company added a new area to its unconventional development activities with the commissioning of production of the first 2 horizontal oil wells in the Al Sur de Los Lagos block.

The company also generated significant improvements in well construction efficiency. For instance, the company reached an annual average of 7.8 frac stages/day (frac stages in the period / days in stimulation operation).

Main operated areas

Neuquina basin

Loma Campana block

This block is operated by YPF with a 50.0% working interest, under a joint venture agreement with Chevron.

During 2022, drilling activity in this block was executed with 3 rigs throughout the year.

In 2022, the horizontal length and frac stage increased to 2,628 mts horizontal length and 45 frac stages. Additionally, the company achieved the record of 20 stages stimulated by fracture set in one day.

La Amarga Chica block

This block is operated by YPF with a 50.0% working interest, under a joint venture agreement with Petronas.

During 2022, drilling activity in this block was executed with 3 rigs throughout the year.

The block is under full development, going through the ramp up phase. Drilling activity is being performed across the entire block.

The block reached peak net production of 21.0 mbbl/d in May 2022, being ‘La Cocina’ the most productive horizon.

Bandurria Sur block

This block is operated by YPF with a 40.0% working interest, under a joint venture agreement with Shell and Equinor Argentina AS (Sucursal Argentina) (‘Equinor’).

During 2022, drilling activity in this block was executed with 2 rigs throughout the year and in September 2022 a third rig started operating.

Bajo del Toro Norte block

This block is operated by YPF with a 50.0% working interest, under a joint venture agreement with Equinor.

Narambuena block

This block is operated by YPF with a 50.0% working interest, under a joint venture agreement with Chevron which has the objective of the joint exploration of unconventional hydrocarbons in the Neuquén Province, within the Chihuido de La Sierra Negra Sudeste - Narambuena area.

The agreement contemplates an investment in two phases and the possibility of a third phase, to be agreed upon in the future based on the results obtained from the exploration of the area. During 2018 Phase I activities were completed. Phase II activities commenced in April 2018 and were completed in April 2021. In January 2022, Chevron confirmed its decision to exercise the option of entering into Phase III of the unconventional hydrocarbon investment project in the Narambuena block. Additionally, YPF and Chevron initiated the process to obtain the CENCH for the block.

In 2022, there was no drilling activity.

El Orejano block

This block is operated by YPF with a 50.0% working interest, under a joint venture agreement with Dow.

Rincón del Mangrullo block

This block is operated by YPF with a 50.0% working interest, under a joint venture agreement with Pampa Energía in the Mulichinco formation. The Vaca Muerta formation in this block is 100.0% owned by YPF.

During 2022, drilling activity in this block was executed with 1 rig throughout the year.

In 2022, the development of the block in the north-central area with horizontal gas wells continued. YPF’s longest slim design well was drilled, with a horizontal length of 4,253 mts. A stimulation design pilot was executed with high intensities, like the one used by partners in non-operated blocks with little production history to be able to evaluate performance.

Aguada del Chañar block

This block is identified as a high potential field, supported by the production results obtained in the La Amarga Chica block located to the west and in the Aguada de Cánepa block located to the east.

Main non-operated areas

Neuquina basin

Aguada Pichana Este block

This block is operated by Total S.A. YPF holds a 27.27% working interest in the Mulichinco formation and a 22.5% working interest in the Vaca Muerta formation.

Aguada Pichana Oeste block

This block is operated by Pan American Energy LLC, Sucursal Argentina (‘Pan American Energy’). YPF holds a 30.0% working interest.

During 2022, several facilities were finished such as the main north loop pipeline and the expansion of the APO2 compression plant which allows an increase in maximum possible production from 12 mmcm to 16 mmcm.

La Calera block

This block is operated by Pluspetrol. YPF holds a 50.0% working interest.

The area is part of the Plan GasAr 2020-2024, which aims to boost gas production in Argentina by granting competitive prices.

Regarding the facilities, during 2022, the construction of La Calera – Loma Campana pipeline began, which is expected to be finished by 2023.

Additionally, during 2022, the construction of central production facilities project continued, and it is expected to be finished by 2023, which will allow to achieve a gas treatment capacity of 10.2 mmcm/d and 4,800 cm/d of condensate in the block.

Bajada de Añelo block

This block is operated by O&G Developments Ltd. S.A. (an affiliate of Shell Compañía Argentina de Petróleo S.A.). YPF holds a 50.0% working interest.

The joint venture agreement sets for the main terms and conditions for the joint development of a shale oil and shale gas pilot in 2 phases. During 2022, construction of the site for EPF began.

Lindero Atravesado block

This block is operated by Pan American Energy. YPF holds a 37.5% working interest.

Conventional activities

Conventional activities continue with the adding value goal through the optimization and reduction of expended capital and costs of its operations. Driven by the operative excellence, the company continues enhancing production of mature fields through the execution of revitalizing projects improving the oil and gas recovery, generating a profitable growth while continue the decline softening of the fields.

Plan GasAr 2020-2024 along with the new Plan GasAr 2023-2028 continue to be a growth driver for upstream activities achieving its production goals with the development of tight gas at Río Neuquén block, giving YPF the monetization of its extensive gas reserves while ensuring short and long-term supply for demand goals.

Improved oil recovery (‘IOR’) and enhanced oil recovery (‘EOR’) is being developed in several areas of the company. Manantiales Behr reached a new peak oil production by third year in a row, reinforcing YPF compromise with waterflooding and tertiary recovering projects development to improve all of its potential oil production.

Under the current market situation, conventional activities focused on a high operative excellence requirement dealing with the operative and development costs optimization, which triggered the incorporation of new proved reserves.

Seeking to strengthen the company’s position, YPF continued actively managing its portfolio, including new strategies for non-core matured assets.

Oeste Region

During 2022, production in the Oeste Region was 174.3 mboe/d, representing 34.6% of YPF’s total production. (YPF net from operated and non-operated areas).

Main operated areas

Neuquina and Cuyana basins

Llancanelo block

In this heavy oil field, drilling was resumed during 2022.

Cañadón Amarillo block

During 2022, 3 workovers were carried out to evaluate the Mulichinco formation. Results were according to expectations in oil production and above expectations in water production.

Cerro Morado Este block

An injectivity polymer test done in 2021 to evaluate the rate, viscosity and pressure with which the polymer can be injected in this reservoir achieved results according to expectations.

Main non-operated areas

Neuquina basin

Loma Negra block

This block is operated by CAPEX S.A. YPF holds a 35.0% working interest.

Puesto Pinto (CNQ 7/A) and Jagüel Casa de Piedra blocks

These blocks are operated by Pluspetrol. YPF holds a 50.0% working interest.

Gobernador Ayala (CNQ-7) block

This block is operated by Pluspetrol. YPF holds a 30.01% working interest.

Sur Region

During 2022, production in the Sur Region was 105.1 mboe/d, representing 20.9% of YPF’s total production (YPF net from operated and non-operated areas).

Main operated areas

Golfo San Jorge basin

El Trébol - Escalante blocks

During 2022, 38 workovers (primary and secondary recovery) were carried out in oil producing as well as injector wells, in both El Trébol and Escalante blocks.

Additionally, in the El Trébol block a polymer injection pilot was launched in 2022.

Manantiales Behr block

The primary oil drilling campaign was completed in the following blocks: in the San Diego and Myburg Este blocks; in the El Alba Norte Grimbeek block; in the El Alba block; in the La Carolina block; in the El Alba Grimbeek block; and in the Grimbeek Norte II block.

Additionally, a campaign of 56 primary and secondary oil workovers was carried out in various areas of the block.

Also, during 2022, a secondary polymer injection pilot was launched in the Grimbeek Norte II block. After a six-month period of injection, signs of incremental production are being observed.

Restinga Alí block

Productivity and performance are under evaluation in order to define the continuity of the development.

Cañadón León - Meseta Espinosa blocks

During 2022, the company performed primary recovery projects (4 workovers were carried out), secondary recovery projects (9 workovers were carried out), and tertiary recovery projects (7 workovers were carried out).

During 2022, the company continued improving the development of the Bajo Barreal and Castillo formations. As of December 31, 2022, the results were being evaluated.

Los Perales - Las Mesetas blocks

During 2022, the company performed primary recovery projects (15 workovers on oil and gas wells with results above expectations) and secondary recovery projects (15 workovers on oil wells, 1 workover on a water injector well and 1 conversion to injector well, with results according to expectations).

Additionally, a new polymer injection pilot was carried out at the Los Perales Sur area.

Barranca Yankowsky block

As of December 31, 2022, production was under evaluation.

Cañadón La Escondida - Las Heras, El Guadal - Lomas del Cuy and Cañadón Vasco blocks

During 2022, 18 workovers were carried out on oil producing wells with results according to expectations.

Main non-operated areas

Golfo San Jorge basin

El Tordillo and La Tapera - Puesto Quiroga blocks

These blocks are operated by Tecpetrol. YPF holds a 7.196% working interest.

On September 12, 2022, by the means of the Decree No. 1,068/2022 the Chubut Province granted the La Tapera and Puesto Quiroga blocks with a 50% royalties’ reduction. The benefit is to be applied on all new producing wells developed until July 2027 and for a 10-year period.

Exploration & Development activity in the rest of South America

Bolivia

On May 25, 2021, Law No. 1,376 was enacted, which approved the amendment to the Oil Services Contract for the exploration and exploitation of the Charagua block executed by YPF E&P Bolivia S.A. (an indirect subsidiary of YPF) and Yacimientos Petrolíferos Fiscales Bolivianos (‘YPFB’), whereby YPF E&P Bolivia S.A. assigned 40.0% of its whole interests, rights and duties under said contract to YPFB Chaco S.A. On August 16, 2021 this amendment process was formally completed by the government notarization of the contract.

Colombia

The COR 12 and COR 33 blocks are located in the Cordillera Oriental basin, which the company operates pursuant to the authorization by the ANH. The company’s working interest is 60.0% in the COR 12 and 55.0% in the COR 33. The combined net area of these blocks is 700 km2. In 2016, together with the company’s partners, the company informed to the ANH of the company’s decision to relinquish both blocks. In July 2022, the ANH initiated administrative proceedings claiming the exploration commitments were not performed or paid. As of the date of this annual report, the company has presented its defenses in the administrative proceedings and the ANH is considering evidence offered by both parties, the company and the ANH itself.

Downstream

During 2022 the company’s downstream activities included crude oil refining and transportation, and the marketing and transportation of refined fuels, lubricants, LPG, and other refined petroleum products in the domestic wholesale and retail markets and certain export markets.

During 2022 the Downstream business segment was organized into the following divisions:

Refining division (oil refining and petrochemical production).

Marketing division (commercialization and marketing of refined and resale products).

Chemicals division (commercialization and marketing of petrochemical products).

Logistic division (transportation of crude oil to refineries and distribution of refined and petrochemical products to be marketed in the different sales channels).

Trading division (trading refined products and crude oil to international markets).

The company markets a wide range of refined petroleum products throughout Argentina through an extensive network of sales personnel, YPF-owned and independent distributors, and a broad retail distribution system. In addition, the company exports refined products, mainly from the port at the La Plata City in the Buenos Aires Province. The refined petroleum products marketed by the company include gasoline, diesel, jet fuel, kerosene, heavy fuel oil and other crude oil products, such as motor oils, industrial lubricants, LPG and asphalts.

Refining division

The company wholly own and operate 3 refineries in Argentina:

La Plata refinery, located in the Buenos Aires Province.

Luján de Cuyo refinery, located in the Mendoza Province.

Plaza Huincul refinery, located in the Neuquén Province.

The company’s 3 wholly-owned refineries have an aggregate refining capacity of 328.1 mbbl/d. The refineries are strategically located along the company’s crude oil pipeline and product pipeline distribution systems. In 2022 and 2021, the company’s crude oil production, substantially all of which was destined to the company’s refineries, represented 80.1% of the total crude oil processed by the company’s refineries. The remaining processed crude oil is purchased from third parties. Through the company’s stake in Refinor, the company also owns a 50% interest in a 26.1 mbbl/d refinery located in the Salta Province, known as Campo Durán.

The La Plata refinery is the largest refinery in Argentina, located at the port in the La Plata City, in the Buenos Aires Province, 60 km from the City of Buenos Aires, with a nominal capacity of 189.0 mbbl/d. The refinery includes three distillation units, two vacuum distillation units, two fluid catalytic cracking units, two coking units, a coke naphtha hydrotreater unit, a platforming unit, two diesel hydro finishing units, a gasoline hydrotreater, an isomerization unit, a fluid cracking catalyst (‘FCC’) naphtha splitter and desulfuration unit and a lubricants complex, in addition to a petrochemical complex that generates MTBE, TAME and aromatics compounds used for blending gasoline and other chemical products. During 2022, the capacity utilization rate of the La Plata refinery was affected by the revamping of the Topping 4 unit, which was finished this year, and continued working on the Topping D unit and the new desalinator. Additionally, the production of base oils was affected by the maintenance turnaround of the lubricants complex.

The crude oil processed at the La Plata refinery in 2022, of which 75.4% was YPF-produced, originates mainly from the Neuquina and Golfo San Jorge basins. The La Plata refinery crude oil supplies come from the Neuquina basin by pipeline and from the Golfo San Jorge basin by vessel, in both cases to Puerto Rosales, and then by pipeline from Puerto Rosales to the La Plata refinery.

The Luján de Cuyo refinery has a nominal capacity of 113.9 mbbl/d, the third largest capacity among refineries in Argentina. This refinery includes two distillation units, a vacuum distillation unit, two coking units, one fluid catalytic cracking unit, a platforming unit, an ethyl tertiary-butyl ether (‘ETBE’) unit, an isomerization unit, an alkylation unit, a FCC naphtha splitter, a hydrocracking unit, a FCC naphtha hydrotreater unit and two gasoil hydrotreating units. During 2022, the company started the revamping of the Topping III unit.

Due to its location in the western of Mendoza Province and its proximity to significant distribution terminals the company owns, Luján de Cuyo refinery has become the primary facility responsible for providing to the central and northwest Provinces of Argentina with petroleum products for domestic consumption. The Luján de Cuyo refinery receives crude supplies from the Neuquina and Cuyana basins by pipeline directly into the facility, 86.1% of the crude oil processed at the Luján de Cuyo refinery in 2022 was produced by the company. Most of the crude oil purchased from third parties originates from oil fields located in the Neuquén and Mendoza provinces.

The Plaza Huincul refinery, located in the Neuquén Province, has an installed capacity of 25.2 mbbl/d. The only products produced at this refinery are gasoline, diesel and jet fuel, which are sold primarily in nearby areas and in the southern regions of Argentina. Heavier products, to the extent production exceeds local demand, are blended with crude oil and transported by pipeline from the refinery to the company’s facilities in the La Plata City for further processing. The Plaza Huincul refinery receives its crude supplies from the Neuquina basin by pipeline. During 2022, the processing of Plaza Huincul refinery was affected by the maintenance turnaround of the topping and reforming units.

Regarding investments related to new specifications for sulphur content in fuels, established by Resolution SE No. 576/2019, which will enter into force in 2024, the company continued working in the Luján de Cuyo refinery to improve the quality of diesel fuel (a new hydro desulfurization unit II (‘HDS’), a new hydrogen generator unit II (‘Hydrogen II’), and the revamping of the HDS I unit); while in the La Plata refinery the revamping of the catalytic cracking naphtha hydrotreatment plant was completed and the revamping of the magnaforming unit and the new coke naphtha hydrotreatment plant (‘HTNC’) continued.

The company’s refineries are certified under International Organization for Standardization (‘ISO’) standards.

During 2022, the renewable energy produced by the Manantiales Behr wind farm (located in the Chubut Province), Los Teros I and II wind farms (located in the Buenos Aires Province) and the Cañadón León wind farm (located in the Santa Cruz Province) represented 30.0% of the electricity consumption of the Luján de Cuyo refinery and 11.2% of the La Plata refinery. See ‘—Gas and Power—Power operations—The Argentine electricity generation market’.

Marketing division

The company’s Marketing division supplies gasoline, diesel, Jet A-1 fuel, lubricants, asphalts, LPG and other petroleum products throughout Argentina and other countries in the region. The company works with several industries such as retail, transport, mining, and agriculture.

During 2022, the fuel market continued surpassing pre-pandemic consumption levels. In 2022, the main levers of growth were the segments of mining, oil and gas and transportation (through service stations and passengers transport companies) and diesel oil was YPF’s most sold product in volume.

In 2022, YPF maintained its leading position in Argentina, with a market share of 55.5% for liquid fuels.

YPF sells two types of gasoline: Infinia gasoline, a premium 98 octane gasoline; and Super gasoline, a regular 95 octane gasoline.

The company’s market share of Infinia and Super gasolines, according to information provided by the Argentine SE, was 59.6% and 51.5%, respectively, as of December 31, 2022.

Regarding diesel, according to the Argentine SE, the company’s market share of 500 and 800 part per million (‘ppm’) of Sulphur diesel and 10 ppm of Infinia diesel corresponded to 54.4% and 62.1%, respectively, as of December 31, 2022.

During the second half of 2022, the company presented a media campaign reinforcing the brand attributes (quality and technology) of the company’s liquid fuels, specially Infinia gasoline.

Consequently, in 2022, YPF focused its efforts on the following strategic pillars: contribution to the development and expansion of the retail network; development of brand loyalty through strengthening the ServiClub programme; making the YPF App focus mainly on customer experience; and continuing with the construction of a comprehensive and innovative fuel strategy. The company’s alliances with Lionel Messi, the Argentine Soccer Association and Adidas were held once again, through shirt and soccer ball promotions in 2022. Campaigns and actions were launched to improve communication and impact on target consumers in line with the FIFA 2022 World Cup in Qatar.

From the point of view of digitalization, YPF continued to focus on promoting the YPF App, which has already positioned as one of the most widely used methods of payment within the service stations with a penetration of 16.2%. The YPF App allows to not only streamline the payment process for the customers, but also centralize the network benefits and discounts, such as those for healthcare personnel, bank promotions, YPF Boxes (the company’s oil change service shop) discounts, among others. During 2022, a new functionality of charging in YPF App’s account was incorporated and allows the company to reach to unbanked customers.

With respect to the Infinia and Super gasolines, the company also continued meeting the ‘top tier’ standard for gasoline introduced by Mercedes Benz, BMW, Audi, GM, Ford, Toyota, Honda, Volkswagen, Navistar and the FCA.

The Marketing division includes the following units:

Retail unit

As of December 31, 2022, Retail unit sales network in Argentina consisted of 1,658 active retail service stations. Out of these, 157 are operated by OPESSA, the company’s wholly owned subsidiary, 138 are operated by the Automóvil Club Argentino (‘ACA’) while the rest are operated by third parties.

According to the company’s estimates, as of December 31, 2022, the company was the main fuel retailer in Argentina, with 35.1% of the Argentina’s gasoline service stations, followed by Shell, Axion, and Puma with 17.9%, 13.1%, and 8.2%, respectively.

During 2022, the company continued with the network ‘transformation’ project, installing 128 new images. Additionally, the company continues with the construction of OPESSA Echeverria, which aims to become the maximum experience service station in Argentina and is scheduled to be finished during the first half of 2023.

With respect to the company’s network, the company inaugurated 17 service stations, which have impacted 17 districts and 8 Argentine provinces, 64.7% of these service stations were new constructions.

Throughout 2022, YPF successfully renewed 96.8% of its expiring contracts with third party retail station owners, which enabled the company to maintain a leading position in the market.

The company also continues with the +YPF program, which rewards the service stations with the best performance.

Convenience Store unit (‘Full stores’)

YPF’s Convenience Store unit is a franchise which comprises 769 convenience stores. Out of these, the company operates 158 through OPESSA, while 611 are operated by third parties. YPF’s stores franchising model generates income in the form of royalties paid by stores and suppliers, materialized as a percentage of the store´s sales.

The company’s main strategy for the Convenience Store unit is expansion.

During 2022, the company continued working towards achieving operational excellence to deliver the best service and products to the company’s customers. Therefore, concept tests of advanced gastronomic equipment were installed in several stores to support hot & cold meals categories.

In 2022, YPF stores sold 208 million units distributed in more than 2,000 stock keeping units (‘SKU’s’). The main categories of products sold were coffee, hot and cold meals, non-alcohol drinks, convenience and kiosk products.

Agriculture unit

The Agriculture unit provides an extensive portfolio of products and services, including agricultural advice, delivery, and application of products at the consumption site. During 2022, this unit focused on continuing growing on farmer closeness through five pillars: (i) concentrating on providing service to facilitate tasks to improve results; (ii) providing an integral response from initial sowing to final harvesting, (iii) producing energy through grain (iv) innovating in new phytosanitary products (YPF Agro Diclosulam, TILAM); (v) strengthening the value proposal on fertilizers with precision agriculture, developing seed and traits portfolio; and (vi) maintaining the operational excellence throughout its network.

This strategy was carried out through a network of 103 exclusive dealers, 6 of which are directly operated by YPF. The network is present in 19 Argentine provinces, covering all the agro-productive areas, offering a complete agro portfolio, which includes fuel, seeds, crop nutrition and crop protection products, lubricants, and ensiling bags.

In order to be a point of reference in the industry and stay close to agricultural producers, YPF Agro has been the main sponsor of Expo Agro (the most relevant agrobusiness exhibition in Argentina) since 2020. YPF Agro has sustained a constant renewed portfolio of products and commercial conditions for the exchange of grains since 2019. At the same time, the agricultural unit has been developing and promoting sustainable agronomic practices.

Industry unit

The Industry unit supplies the entire national industry sectors, which requires a broad portfolio of products and services to meet customer needs. This unit develops specific solutions for mining, oil and gas, transport and general industries. It also supplies products such as fuels (diesel, gasoline, jet fuel, AvGas and fuel oil), lubricants, urea, coal, asphalts, and derivatives (sulfur, CO2, decanted oil, and aromatic extract), either directly from the company’s refineries to the point of consumption through the company’s own ground and waterway network (more than 10,000 direct customers), or through a network of 16 industrial distributors with national coverage (mining, oil and gas and asphalts). Additionally, the company’s aviation segment provides Jet A-1 fuel in 50 airports and AvGas 100LL in 41 airports across Argentina.

The company’s purpose is to promote efficiency in the value chain of the company’s industry customers, offering energy solutions, supplies and services. Consequently, the company’s strategy is based on closeness with the company’s customers and the development of innovative tailored solutions.

One of the highlights of 2022 was the launch of the YPF Ruta App, a new application specifically oriented to the company’s transportation clients through which, so the company can offer a more agile payment process in the service station and a centralization of the network´s benefits such as bank promotions, lubrications discounts, among others.

Lubricants and Specialties Latam unit

In the Lubricants and Specialties unit, the company manufactures a wide range of products, including motor oil, heavy duty and industrial lubricants for commercialization in retail, wholesale and industrial markets through a grid of dealers and distributors. The company has developed its lubrication network in Argentina, YPF Boxes, with 388 sales points all over the country. In the La Plata industrial complex, the company operates a manufacturing facility where the company produces lubricants for the domestic market and for export .The company’s line of automotive lubricants, including mineral and synthetic oils, has been approved by leading global automotive and engine manufacturers, including Ford, GM, Porsche, Scania, Mercedes Benz, Volkswagen, Renault, PSA, Audi, Deutz, Cummins, Volvo, Toyota, MAN Truck, Subaru, Suzuki, Metalfor, Detroit Diesel, ZF, Allison and MTU.

The company exports to Brazil and Chile through its wholly-owned companies. The company also exported to its network of distributors located in Bolivia, Uruguay and Paraguay. Regarding the company’s subsidiaries operations, YPF Chile lubricants sales reached 11.7 mcm.

YPF’s strategy is to continue its leadership in the development of lubricants, meeting the latest generation original equipment manufacturers (‘OEMs’) requirements for protection and performance needs, in both passenger and heavy-duty vehicles. In 2022 the company launched the premium line ELAION Auro, the highest quality for passenger cars motor oil (‘PCMO’).

LPG unit

The company is engaged in the LPG wholesale business, which encompasses LPG storage, logistics and commercialization to domestic and foreign markets. The company obtains LPG from natural gas processing plants and refineries, as well as from third parties.

In the domestic market, the company sells LPG mainly through distributors that supply the domestic retail market. The LPG unit does not directly supply the retail market, which is supplied by the company’s affiliate, YPF GAS. During 2022, the company sold 26.5% of its LPG production to YPF GAS for the domestic market.

The company’s main clients in the domestic market are companies that sell LPG in cylinders or bulk packing to end-consumers, also providing LPG to households in some regions. The main destinations of these exports were Chile, Paraguay and Uruguay. Transportation of LPG to overseas customers is carried out by truck, pipeline and barges.

Chemicals division

Petrochemicals are produced at YPF productive units in Ensenada, Luján de Cuyo and Plaza Huincul.

Petrochemical production operations in the Industrial Complex Ensenada (‘CIE’) are closely integrated to the refining activities at the La Plata refinery, allowing for a flexible supply of feedstock, the efficient use of by-products, such as hydrogen, and the supply of aromatics to increase gasoline octane levels.

Natural gas, the raw material for methanol, is supplied by the company’s Upstream business segment. The use of natural gas as a raw material allows the company to monetize reserves, demonstrating the integration between the Chemicals division and the Upstream business segment.

In 2022, 85.8% of the company’s petrochemical sales (including propylene) were made in the domestic market, while the company exported the remainder to Mercosur countries, the rest of Latin America, Europe and the United States.

Additionally, the La Plata petrochemical plant was certified under Responsible Care in 2019, which is a voluntary program of the chemical industry that promotes continuous improvement in areas of safety, occupational health and the environment. The certification of the company’s petrochemical business covers the following processes:

Refining process of crude oil and production of gas and liquid fuels, lube base stocks and paraffin, petroleum coke (green coke) and petrochemical products in the units of refining, conversion, lube, aromatics, olefins, PIB (polyisobutene) / maleic and LAB / LAS (linear alkyl benzene / linear alkyl benzene sulphonate), methanol production and storage.

Management and development of the petrochemical business of the company, planning and economic and commercial control, commercialization and post-sale service of petrochemical products.

Production of complex aromatics, olefins, maleic, polybutenes and the provision of energy services that operate within the CIE.

The Chemicals division also has 50% ownership of Profertil a worldwide leader in fertilizers, which initiated operations in 2001. Profertil has a production facility in Bahía Blanca which produces 1.3 million tons of urea and 0.8 million tons of ammonia per year. Additionally, Profertil markets other nutrients and special blends of prepared land to optimize soil performance.

During 2022, the production of methanol was affected by the maintenance turnaround of the unit located in Industrial Complex Plaza Huincul.

Logistic division (crude oil and products transportation and storage)

The company has available for the company’s use a network of 6 major pipelines, 3 of which are wholly-owned by the company. The crude oil transportation network includes nearly 2,800 km of crude oil pipelines with 640,000 barrels of aggregate daily transportation capacity of refined products. The company has total crude oil tankage of 7 mmbbl and maintain terminal facilities at five Argentine ports.

The company also owns three tanks in the Berisso City, in the Buenos Aires Province, with 90,000 cm3 of capacity.

In June 2019 the company achieved an important milestone with the start of the operation of the Loma Campana - Lago Pellegrini pipeline. This pipeline allows for the evacuation of conventional and unconventional crude oil from the Vaca Muerta formation. The pipeline is owned by OLCLP, a company owned by YPF (85%) and Tecpetrol (15%), and is operated by a third company, Oleoductos del Valle S.A. (‘Oldelval’).

The company holds, through Oleoducto Transandino Argentina S.A. and Oleoducto Transandino Chile S.A., an interest of 36% and 36% respectively, in the 428 km trans Andean pipeline, which transported crude oil from Argentina to Chile. This pipeline ceased operating on December 29, 2005, as a consequence of the interruption of oil exports resulting from decreased production in the north of the Neuquén Province.

A large portion of these investments is being carried out through the company’s midstream affiliates, such as Oldelval and Oiltanking Ebytem S.A. (‘OTE’) In addition, the company is working towards overhauling the trans-Andean pipeline, with the intention of having it in operating conditions in the second quarter of 2023. The company is also working on the construction of the La Amarga Chica - Puesto Hernández pipeline, which will increase the evacuation capacity of the Vaca Muerta Norte oil fields, with an evacuation capacity of 40,000 cm/d, and the La Calera - Loma Campana pipeline, which will have an evacuation capacity of 10,000 cm/d.

In 2022, YPF entered into an agreement with Oldelval, to hire firm capacity to transport liquid hydrocarbons for 12,526 cm/d until November 2037, through which Oldelval incorporates, as of 2025, liquid hydrocarbon transportation capacity in the Allen - Puerto Rosales pipeline for an additional 50,000 cm/d to the current base transportation capacity of 36,000 cm/d.

Additionally, in 2022, YPF submitted to OTE, an irrevocable offer to contract firm storage and dispatch capacity to liquid hydrocarbons ships for 8,000 cm/d until November 2037, through which OTE incorporates, as of 2025, dispatch capacity to liquid hydrocarbons ships for an additional 50,000 cm/d to the current base dispatch capacity of 10,900 cm/d.

The company owns 33.15% of Terminales Marítimas Patagónicas S.A., operator of two storage and port facilities: (i) Caleta Córdova in the Chubut Province, which has a capacity of 314,000 cm; and (ii) Caleta Olivia in the Santa Cruz Province, which has a capacity of 246,000 cm. The company also has a 30% interest in OTE, operator of the maritime terminal of Puerto Rosales, which has a capacity of 480,000 cm, and in the crude oil pipeline that connects Brandsen, with a 60,000 cm of storage capacity, to the Axion Energy Argentina S.R.L. refinery in Campana city, which extends 168 km, in the Buenos Aires Province.

In Argentina the company also operates a network of multiple pipelines for the transportation of refined products with a total length of 1,801 km. The company also owns 17 storage terminals for distribution of refined products and 7 LPG storage terminals with an aggregate capacity of 1,620,000 cm. Three of the company’s storage and distribution terminals are annexed to the refineries of Luján de Cuyo, La Plata and Plaza Huincul. Ten of the company’s storage and distribution terminals have maritime or river connections. The company operates 50 airplane refueling facilities, 40 of which are wholly-owned, with a capacity of 22,500 mcm, 141 manual fuel dispensers and 13 automatic fuel dispensers. These facilities provide a flexible countrywide distribution system and allow the company to facilitate exports to foreign markets, to the extent allowed by government regulations. Products are delivered by an exclusive third-party tanker truck fleet of 2,400 units.

Additionally, during 2022 the adaptation of the pumping station in Dock Sud was completed, enabling to increase the transport capacity of the La Plata - Dock Sud - La Matanza polyduct. In addition, the dispatch work of Infinia Diesel was carried out through the Port of La Plata, enabling dispatch capacity for other products, and the construction of the site to enable the import of group II base oils. Investments for continuity of operations were carried out mainly associated with changes of stretches of pipelines and their maintenance, and the repair of tanks in different dispatch terminals.

Trading division

The company’s Trading division sells refined products and crude oil to international customers, and purchases crude oil from domestic oil companies and refined products from international suppliers. Exports may include crude oil, unleaded gasoline, diesel, fuel oil, LPG, light naphtha, virgin naphtha, MTBE, green coke, decanted oil and AvGas.

This division exports to different countries, mainly to China, Paraguay and Brazil, among others.

In 2022, the company continued supplying virgin naphtha to Petropar, in Paraguay, totaling an annual delivered volume of 0.56 mmbbl. The total quantity is made up of 0.25 mmbbl corresponding to the contract agreed in 2021, and additional of 0.31 mmbbl corresponding to a new contract celebrated in 2022.

In addition, imports of low sulfur diesel, gasoline, AvGas, among others, totaled 9.9 mmbbl in 2022. The United States, the United Arab Emirates and India were the main origin countries of these imports.

Imports of fertilizers and agrochemicals totaled 0.4 million tons in 2022. The United States and South Korea were the main origin countries of these imports.

Gas and Power

During 2022, the company’s gas and power activities included: (i) the natural gas transportation to third parties and the Downstream business segment, and its commercialization; (ii) the commercial and technical operation of the LNG regasification terminals in Escobar and Bahia Blanca, by hiring regasification vessels; (iii) the conditioning and processing of natural gas; (iv) the distribution of natural gas; (v) the separation of natural gas; and (vi) the generation of thermal conventional electrical energy and renewable energy through its investments in associates and joint ventures.

Natural gas distribution

The company holds a 70% stake in Metrogas. During 2022 Metrogas distributed 6,773 mmcm (or 238.8 bcf) of natural gas. Tariffs that regulate the gas distribution market are determined by a complex and regulated framework.

LNG regasification

YPF provide regasification services to ENARSA under certain agreements since May 2008.

UT Escobar has executed agreements with Excelerate Energy South America LLC to provide and operate a 151 mcm (or 533 mcf) regasification vessel moored at the LNG Escobar terminal with the capacity to supply up to 22.5 mmcm/d (or 800 mmcf/d) of natural gas. Since the beginning of its operations, LNG Escobar terminal has converted 25.6 bcm (or 903.0 bcf) of LNG into natural gas, which has been injected into the Argentine network. In 2022, natural gas injected into the Argentine network amounted to 1.3 bcm (or 44.4 bcf).

In 2022, the company approved an addendum to the UT GNL Escobar Contract of the Escobar Regasification Terminal to extend its validity until May 31, 2023, maintaining the same commercial conditions. Also, the company entered into an agreement with ENARSA to provide the regasification service at the Bahia Blanca terminal from May 2022 through September 2022 (during the winter season).

In September 2022, YPF and Petronas signed a Joint Study and Development Agreement for an integrated LNG project in Argentina that will encompass the production of unconventional gas of the Upstream business segment, the development of gas pipelines and infrastructure, the production of LNG, as well as international marketing and logistics.

In 2020, YPF and Exmar Energy Netherlands B.V., Exmar Argentina S.A.U. and Exmar N.V. (collectively ‘Exmar’) entered into a settlement agreement which established the termination of the charter and liquefaction services agreements of the Tango FLNG liquefaction barge executed on November 20, 2018, and the termination of the arbitral claims initiated by Exmar.

Other natural gas investments and activities

Natural gas transportation and storage capacity

Natural gas is delivered by the company through its own gathering systems and through the midstream companies, such as Gasoducto del Pacífico (Argentina) S.A. (‘GPA’) in which the company has a participation of 10% and Transportadora de Gas del Sur S.A. (‘TGS’) from each of the major basins to the five trunk pipelines.

In 2022, the company renegotiated with GPA the firm natural gas transport service contract signed in 2016 and addended in 2020, increasing the booked capacity from 5.5 mmcm/d to 7.5 mmcm/d in order to evacuate the natural gas of the Aguada de la Arena block, which is one of YPF’s main gas blocks.

Additionally, YPF provides midstream services, such as natural gas transportation and processing, through the company’s own facilities. In 2022, the company signed a contract with Pan American Energy and Total Austral S.A. to transport up to 3 mmcm/d from May 2022 to May 2027.

The company has utilized natural underground structures located close to consuming markets as underground natural gas storage facilities, with the objective of storing limited volumes of natural gas during periods of low demand and selling such natural gas during periods of high demand. The company’s principal gas storage facility, Diadema, is located in the Patagonia region, near the Comodoro Rivadavia City. The injection of natural gas into the reservoir started in January 2001. During 2022 the company extracted 116.8 mmcm of natural gas from Diadema and sold it to the company’s clients.

During 2022, continued the renovation of the Loma La Lata turboexpander plant and expect to start operation in the third quarter of 2023, increasing the processing capacity of the Neuquina basin by 6 mmcm/d of gas and 600 t/d of NGLs.

The construction of a pipeline network has started in 2022, which should allow the processing of the associated gas from the northern area of the Vaca Muerta formation in the El Portón industrial complex, where there are enough cryogenic plants and compression power. In the same way, in the facilities of the southern region of the Vaca Muerta formation it should enable future developments in the area. In the western region, the transport capacities of the Rincón del Mangrullo gas pipeline will be expanded increasing the transportation capacity up to 5 mmcm/d.

NGLs

YPF owns 38% of Mega, while Petrobras and Dow Chemical own 34% and 28%, respectively.

Mega operates:

A separation plant located in the Loma La Lata field, in the Neuquén Province.

A NGL fractioning plant, which produces ethane, propane, butane and natural gasoline located in Bahía Blanca City, in the Buenos Aires Province.

A pipeline that transports the NGL produced in Loma La Lata to Bahía Blanca City.

Transportation, storage and port facilities in the fractioning plant.

Mega’s maximum annual production capacity is 1.6 million tons of natural gasoline, LPG and ethane. YPF is Mega’s main supplier of natural gas. The production of the fractioning plant is used in the petrochemical operations of PBB Polisur S.A., owned by Dow Chemical, and exported by gas tanker ships to Petrobras and other relevant clients.

In December 2022, Mega approved a project for the construction of a new fractioning module in the Bahia Blanca fractioning plant, which will allow by 2025 to increase 20.0% the production capacity of LPG and natural gasoline. This is equivalent to adding 900 t/d to the current production of C3+ (butane, propane and gasoline).

Natural gas delivery commitments and supply contracts

The company is committed to providing fixed and determinable quantities of natural gas in the near future under a variety of contractual arrangements.

As of December 31, 2022 the company was contractually committed to deliver 81,5 mmcm (or 2,87 bcf) of natural gas in the future (without considering interruptible export supply contracts), of which 38,2 mmcm (or 1,3 bcf) will have to be delivered from 2023 through 2025.

The company was committed to supplying a daily quantity of 3.5 mmcm/d to the Methanex S.A. (‘Methanex’) plant in Cabo Negro, Punta Arenas, in Chile, under three original agreements entered into on January 5, 1995, March 11, 1997 and November 13, 2001 (the ‘GSA 2001’), of which only GSA 2001 for 1.1 mmcm/d is in force.

As a result of negotiations with Methanex, YPF entered into various agreements that involved investments by YPF in hydrocarbon exploration in Chile, tolling agreements and, as of 2019, firm and interruptible gas supply contracts, in order to replace the commitments under the original agreements in accordance with the natural gas export regulations in force in Argentina, which include an agreement between the parties for the recovery of volumes not delivered for regulatory reasons.

YPF entered into a firm agreement, which is annually renewed, with Methanex under Plan GasAr 2020-2024 for the 2022-2023 summer period.

During the winter period in 2022, there were some surpluses of natural gas in the Neuquina basin that allowed the company to perform interruptible exports, mainly concentrated in August and September.

Additionally, in May 2022, the Argentine government called for offers in order to allow firm natural gas exports through Gasoducto Gas Andes Argentina S.A. (‘Gas Andes’) for summer period (October 2022 to April 2023), and GPA from June 2022 to September 2023. Therefore, YPF presented offers to the SE to be awarded along with Innergy Soluciones Energéticas S.A. (‘Innergy’) in order to supply the GPA pipeline until September 2023 (0.3 / 0.5 mmcm/d), and along with its subsidiary YPF Chile S.A. for the operation in the Gas Andes pipeline until April 2023 (0.5 mmcm/d).

Power operations

The Argentine electricity generation market

YPF EE, an affiliate of YPF, considers itself to be one of the strongest competitors in the electrical generation market in Argentina, being the biggest player in the private market (Mercado a Término de Energías Renovables or ‘MATER’) with 37.2% of the market share, and holding the second place in renewable energy generation with 9.4% of the market share during 2022.

In 2022, YPF EE generated 10,150 GWh through its plants located in Tucumán, La Plata, Buenos Aires, Neuquén, Santa Cruz and Chubut, including its indirect interest in Central Dock Sud S.A.

Regarding the renewable energy market, the company’s affiliated company, YPF EE, has a 100% interest in Manantiales Behr, Los Teros I, Los Teros II and Cañadón León wind farms, which represented 12.8% of wind power generation in Argentina during 2022 and 12.0% of wind power installed capacity as of December 31, 2022.

During December 2021, Cañadón León wind farm started its commercial operations with an installed capacity of 123 MW, which allowed YPF EE to be awarded a power purchase agreement (‘PPA’) for a 20-year term with CAMMESA for 102 MW. The remaining 21 MW will be delivered to YPF under a PPA for a 15-year term in the MATER.

The year 2022 was a year of records for YPF EE wind farms. The annual production podium was led by Manantiales Behr wind farm with an average load factor of 61.9% compared to others wind farms of the national electricity grid (‘SADI’). Both Cañadón León and Los Teros wind farms reached high levels of efficiency (a maximum of 69.3% in August 2022 and 60.1% in November 2022, respectively).

As far as projects, in February 2022, YPF EE started the construction of the 100 MW first stage of the Zonda solar farm, located in the Iglesia Department in the San Juan Province, which will allow to generate more than 300 GWh a year to supply the MATER as of the second quarter of 2023.

Seasonality

Historically, the company’s results have been subject to seasonal fluctuations during the year (year ended December 2022), particularly as a result of greater natural gas sales during the winter mainly due to higher prices.

Regulations

The company is subject to the requirements of the following federal environmental regulations (including the regulations issued thereunder): National Constitution (articles 41 and 43); Law No. 25,675 on National Environmental Policy; Law No. 25,612 on Integrated Management of Industrial and Service Industry Waste; Law No. 24,051 on Hazardous Waste; Law No. 25,916 on Management of Domestic Waste; Law No. 20,284 on Clean Air; Law No. 25,688 on Environmental Management of Waters; Law No. 25,670 on Management and Elimination of Polychlorinated Biphenyls; Law No. 27,520 on Minimal Standards on Global Climate Change Adaptation and Mitigation; Law 27,566 on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean; Criminal Code; Argentine Civil and Commercial Code, which sets forth the general rules of tort law.

History

YPF Sociedad Anonima was founded in 1977.