YPF and Eni formalize joint venture in Block OFF-5, marking their most ambitious bet yet on South Atlantic pre-salt play

In a development of strategic significance for the regional energy sector, Argentine oil company YPF announced a farm-out agreement with Italy’s Eni, under which the Italian company will acquire a 50% stake in Block OFF-5, located on Uruguay’s outer continental shelf, and will assume technical operatorship once approvals are obtained from ANCAP and the Ministry of Industry, Energy and Mining.

The block covers 16,845 square kilometers in ultra-deepwater (water depths of 2,500–4,100 meters) and is one of the last frontier blocks available in the South Atlantic with a conceptual pre-salt play.

The main geological appeal lies in its analogy with Namibia’s Orange Basin, where the Venus (TotalEnergies, 2022), Graff (Shell, 2022) and Jonker (Galp, 2024) discoveries have confirmed a world-class petroleum system. Paleogeographic reconstructions indicate that both margins shared the same tectono-sedimentary evolution until the Gondwana breakup, preserving key source rocks.

Eni will bring its sixth-generation deepwater technology platform, including drillships capable of 12,000 ft-lbs torque and 20,000-psi blowout preventers, along with operational experience in pre-salt analogs such as Zohr, Baleine, and Coral South. The initial exploration program plans a wildcat well in 2027–2028, with a total depth of 6,200 meters measured depth rotary table (MDRT) and an average water column of 3,800 meters.

The contractual structure includes full carried interest for YPF during a minimum three-year exploration phase, plus a 15% back-in option during development. This optimizes YPF’s exposure to initial CAPEX, estimated at $180–220 million per well and fully financed by Eni to total depth.

Long-term strategic alliance

The agreement strengthens the YPF-Eni strategic partnership established during the FEED of trains 3–4 of the Argentina LNG project (an additional 12 Mtpa). The upstream–midstream integration allows synergies between potential associated gas production and the liquefaction chain, securing preferential placement in European and Asian markets under take-or-pay contracts.

For Uruguay, the operation entails an exploration fee, tiered royalties, and coastal logistics infrastructure development. For Argentina, it represents the potential to add 2P reserves that could double YPF’s current stock (~950 million barrels of oil equivalent) and generate medium-term structural energy revenue.

Block OFF-5 positions itself as the leading pre-salt exploration bet on the American margin and one of the highest-upside projects globally in the 2026–2030 cycle.

Key details:

• Final stake: 50% YPF – 50% Eni; operations 100% Eni
• Target play: Aptian lacustrine pre-salt, direct analogue to Orange Basin, Namibia
• Positive DHI indicators on 3D seismic: flat spots, Class III AVO, amalgamated turbidite channels
• First committed well: 2027–2028, fully financed by Eni ($180–220 million)
• Carried interest: YPF during exploration + 15% back-in during development
• Synergy: Direct integration with Argentina LNG (trains 3–4 FEED already contracted)
• Reservoir upside: 1–2 billion barrels of recoverable oil equivalent if Venus/Graff-scale success is achieved
• Estimated NPV10 per commercial discovery: >$8 billion (Brent forward base scenario)
• Impact on YPF reserves: Potential to double current 2P reserves