Argentina’s Neuquen Province has revoked oil and gas concessions held by three companies, including Petrobras Argentina SA, in a broader dispute over investment in exploration and production.
Neuquen revoked the concessions because the companies–Tecpetrol SA, Argenta Argentina SA and Petrobras Argentina–hadn’t invested enough in production at the oil fields, the province said Tuesday in a statement.
The concessions will be given to the provincial government’s oil and gas company, Gas y Petroleo del Neuquen SA.
Tecpetrol is the exploration and production arm of Argentina’s largest industrial conglomerate, Techint Group, whose main assets are in steel. Petrobras Argentina is a subsidiary of Brazilian state energy company Petroleo Brasileiro.
"I was surprised by the news," Petrobras President Maria das Gracas Foster was quoted as saying by Brazilian newspaper O Globo. "It was unexpected. We have very positive relations with Argentina and are evaluating future opportunities for our presence in the country.
"I’m going to wait until [Wednesday] to evaluate the situation and find out what happened," she said.
Neuquen is one of Argentina’s top oil and gas producers. The province is also thought to be home to significant deposits of unconventional oil and gas locked away in shale rock.
Argentine President Cristina Kirchner has brought significant regulatory and political pressure to bear on the oil and gas industry this year.
She blames underinvestment by private-sector energy companies for falling production of oil and gas that has turned Argentina into a net energy importer from a net exporter. Argentina’s energy import bill doubled to $9.4 billion in 2011.
At the administration’s behest, the top oil and gas provinces have rescinded concessions in recent months.
The vast bulk of the concessions were held by Argentina’s biggest oil and gas producer, YPF SA, which has been singled out for especially harsh treatment by the federal and provincial governments.
Chubut Province recently threatened to pull a concession accounting for 10% of YPF’s total domestic crude oil output.
Local media have interpreted the pressure on YPF as a precursor to an eventual government takeover of the firm, which was run by the state until its privatization in the 1990s.
Source: Dow Jones & Rigzone