YPF expects output hit on strike

Argentina oil company YPF said Thursday morning it expected a production impact from striking workers in Neuquen province and surrounding areas to impact its production in the area, according to local reports.

The workers from the private oil and gas union of Rio Negro, Neuquen and La Pampa are ostensibly holding a 24-hour work stoppage starting at 8 pm Wednesday in protest of the the dismissal of 72 workers at the Renasa refinery in the city of Plaza Huicul, according to the La Nacion newspaper.

"YPF considers this measure as completely unjustified and a negative effect on production in the Neuquen basin," the state oil company said in a statement.

But the action is also a show of strength from provincial forces as officials from oil-producing regions are locked in a major dispute with the federal government over control and administration of Argentina's emerging shale resources.

YPF said in a statement the losses from a 24-hour work stoppage would be an expected average of 80,000 barrels of oil and 3 million cubic feet of natural gas totalling a loss of $12 million.

A 48-hour stoppage would interrupt double those volumes. it continued. With Neuquen producing about 40% of the country's oil and 56% of its gas, the stoppage is a "serious impact to the national development of hydrocarbons," YPF concluded.

A total of 220 delegates representing 23,000 oil workers from companies including YPF, Chevron, ExxonMobil, Shell and Petrobras voted to strike, a Bloomberg report said.

A union spokesman could not be immediately reached for comment Thursday morning.

Provinces and their oil companies seen their power grow since Argentina's oil regime was decentralised in a 2008 law and its shale sector has boomed. This is particularly true for Neuquen province which is home to the heart of the Vaca Muerta shale. The provincial oil company has emerged as a dealmaker in its own right using a carry model.

But YPF would prefer to do away with this system, Pedro Mazer, an attorney with Alfaro Abogados in Buenos Aires, told Upstream an interview.

A streamlined hydrocarbons regime with attractive terms for unconventionals is seen by many observers as a missing piece for attracting investment. But YPF also seeks to consolidate its own power, Mazer said, and that of the federal nation in pursuit of Argentina's broader energy goals.

"Everything is going more national," Mazer said. "Currently there’s a macro tendency that would transfer hydrocarbons to the federal nation, centralising the decision power."


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