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YPF says 23,000-strong strike costs $12 million

PABLO GONZALEZ

BUENOS AIRES (Bloomberg) -- 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, July 23, at 8 p.m. local time may cut production by 160,000 bbl of oil and 6 million cubic meters of natural gas, Buenos Aires-based YPF said in an emailed statement today. The Neuquen basin is responsible for 40% of Argentina’s oil output and 56% 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% while the federal government is seeking to reduce them to a 15% limit, in a bid to attract investors.

YPF Proposal?

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 CEO Miguel Galuccio. YPF declined to comment on the governor’s statement.

YPF’s American depositary receipts, which represent one ordinary share, gained 2.9% to close at $37 in New York. The ADRs have climbed 12% this year.

The striking workers are employed by YPF, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell Plc and Petrobras Argentina SA.

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.”

Governors’ Bill

The federal government “is extorting Neuquen province to impose a bill against the people’s interest,” Pereyra said yesterday in an emailed 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 JV with Chevron, “the provincial companies should also be allowed to do it,” Perez said.

07/24/2014

 

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