Sector policy will mean deficit doubles this year - expert

Thursday, February 23, 2012

Argentina's energy policy will see the sector trade deficit double this year due to spiraling fuel imports, the country's former energy secretary Emilio Apud told BNamericas.

"Current energy policy is making it necessary to import more and more fuel, particularly LNG and diesel, affecting the balance of trade. In 2011 the energy sector saw a trade deficit of US$4.5bn, and this year it's likely to double," the ex-official said.

The government is waging a campaign against local company YPF in a bid to lower share prices ahead of a possible attempt to gain a majority share in the company, according to Apud.

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Rumors of the planned re-nationalization of YPF, which was bought by Spain's Repsol (NYSE: REP) in 1999, have not been confirmed or denied by government officials.

"The government's attitude against Repsol-YPF discredits Argentina in the eyes of the world," Apud said.

Last week, YPF was reported as saying that import complications, caused by tightened controls on dollar purchases, would prevent the company from meeting domestic demand for fuels in the latest incident in the ongoing conflict between the firm and the government.

The state has pledged to guarantee diesel supply to service stations, state news service Télam reported planning and investment (Minplan) minister Julio de Vido as saying.

In case of shortages, expected to amount to between 10% and 15% of demand, state oil company Enarsa will supply service stations at a similar price to that asked by YPF, the report said.

YPF was last week banned from making imports and exports until it had paid a US$8mn tax debt with national tax agency AFIP. The company has not made an official announcement on the issue, but it was expected to pay the debt in order to resume trading.

The company is also affected by Minplan's February 3 announcement of the suspension of Petrol Plus and Refining Plus tax incentive programs for large firms.

Meanwhile, Repsol's CEO Antonio Brufau is in Buenos Aires for the second time this month to discuss the ongoing tensions with the YPF directorate.

President Cristina Fernández has singled out YPF in calls for higher investment from oil companies operating locally to boost investment and production.