The Development Bank of Latin America and the Caribbean (CAF) announced on Monday that it will loan US$375 million to Argentine state oil company YPF to finance its energy transition process. 

The funds will finance improvements in YPF refineries La Plata (in the Buenos Aires province) and Luján de Cuyo (Mendoza) to increase their production of ultra-low-sulfur fuels (both gas and diesel).

The initiative will also expand the company’s refining capacity, promote a technological change in the automotive sector towards less-polluting engines, and create 1600 direct jobs and twice as many indirect ones during the works.  

“With this operation, CAF is collaborating with three aspects of the country. It’s helping the environment by producing less polluting fuels, strengthening energy security through the technological expansion and improvement of YPF industrial complexes, and helping obtain funding sources abroad,” said CAF President Sergio Díaz-Granados.   

Likewise, he said that “in the end, the initiative is a clear example of our fair energy transition agenda, which aims to contribute to sustainable development goals.”

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The company’s New Fuel Specifications (NEC, for its Spanish acronym) will obtain CAF financing in two tranches, one of US$50 million and a second worth US$325 million. The loan will involve private capital from six international financial entities: Santander Bank, Industrial and Commercial Bank of China (ICBC), Panama Branch, Cargill Financial Services International, Citigroup, Bank of China, Grand Cayman Branch, and the Foreign Trade Bank of Latin America (Bladex).

As a result of the NEC project, YPF will go from producing 24% of the country’s total ultra-low-sulfur fuels to 71% by 2026, according to a CAF press release. This will lower the emissions of sulfur dioxide, thus improving atmospheric quality.   

The works had already been kicked off by YPF in 2019 and will continue to develop throughout the next two years.

—with information from Télam