YPF SA said a one-day strike by 23,000 workers in the oil-and-gas-rich Neuquen basin in Argentina will cost the state-owned oil producer as much as $12 million. The workers are planning another strike next week that will be twice as long .
A 24-hour walkout that began yesterday at 8 p.m. local time may cut production by 160,000 barrels of oil and 6 million cubic meters of natural gas, Buenos Aires-based YPF said in an e-mailed statement today. The Neuquen basin is responsible for 40 percent of Argentina’s oil output and 56 percent of gas output, the company said.
Members of the union, which represents workers in Neuquen, Rio Negro and La Pampa, are striking as provincial governors and federal authorities discuss changes to the country’s 1967 hydrocarbons law. The outcome will determine how revenue from the Vaca Muerta formation, which holds the world’s fourth-biggest shale oil reserves and second-largest shale gas reserves, are distributed.
“YPF doesn’t understand the real reasons for the 24-hour strike,” the company said. “Argentina needs the effort of all the oil industry to become energy self-sufficient.”
The union said it’s planning a 48-hour strike for July 30 to July 31. Provinces want to keep the highest royalties at 23 percent while the federal government is seeking to reduce them to a 15 percent limit, in a bid to attract investors.
Other proposed changes would bar Argentine provinces from granting concessions to provincial companies, according to a bill drafted by the federal government. Francisco Perez, governor of Mendoza province, said the proposal was written by YPF Chief Executive Officer Miguel Galuccio. YPF declined to comment on the governor’s statement.
YPF’s American depositary receipts, which represent one ordinary share, gained 2.9 percent to close at $37 in New York. The ADRs have climbed 12 percent this year.
Neuquen Senator Guillermo Pereyra, a former YPF board member and president of the union, known as Sindicato de Petroleo & Gas Privado de Rio Negro, Neuquen & La Pampa, said workers would “stand to defend provincial interests.”
The federal government “is extorting Neuquen province to impose a bill against the people’s interest,” Pereyra said yesterday in an e-mailed statement. The province is projected to lose 16 million pesos ($1.96 million) in royalties from the one-day strike, according to YPF.
Governors of Neuquen, Rio Negro, Jujuy, Chubut and Mendoza provinces will submit an alternative bill to the one drafted by the federal government next week, Mendoza’s Perez said. According to him, the main issue in discussion is the desire of YPF to eliminate the so-called carry system being used by provincially controlled companies to attract investments from companies in cash by ceding areas to exploit.
Since YPF uses the system in its joint venture with Chevron, “the provincial companies should also be allowed to do it,” Perez said.
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