Argentina govt, execs clash over O&G pricing

Thursday, December 1, 2016

Argentina's energy minister, Juan José Aranguren, affirmed that the government will phase out regulated crude oil and natural gas prices on the internal market, in order to bring those prices in line with global benchmarks.

Aranguren defended this stance at an event in Buenos Aires despite calls from some of the country's biggest producers to maintain a floor price for locally produced crude and incentivized wellhead pricing for natural gas, local paper La Nación reported Thursday.

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Paolo Rocca, CEO of Techint – the parent of Latin America-focused oil and gas company Tecpetrol – said that authorities must extend natural gas pricing incentives currently in effect for new production beyond the end of 2017, when they are set to expire, in order to sustain investment in the Vaca Muerta shale reserve.

This sentiment was echoed by Marcelo Mindlin, chairman of Pampa Energía, which recently became one of the country's largest local oil and gas players by acquiring a controlling stake in Petrobras Argentina.

Aranguren was reported as saying that the phasing out of subsidized hydrocarbon pricing will be gradual, and that the energy ministry hopes to draw up a long-term strategic plan for the oil and gas sector in collaboration with producing provinces by December 13.

Crude oil output in Argentina fell 3.2% year-on-year during the first nine months of 2016, according to data from the energy and mining ministry, while natural gas production rose 5.2%.