Argentina's Pan American Energy Says It Can't Access Oil Field

BUENOS AIRES - Pan American Energy said Monday it has been unable to regain access to a strategically important oil and gas field it operates in Argentina's Chubut Province because protesters are blocking the roads leading to it.

On Thursday, as many as 400 protesters took over the Cerro Dragon field, destroyed crucial equipment and jeopardized the flow of gas to many Argentines, according to a statement Pan American issued Friday.

The protesters withdrew from the field on Sunday only to block access to the area on Monday, Pan American said.

The continuation of the problems poses immediate risks not just for Pan American Energy and families in southern Argentina but also for Argentine President Cristina Kirchner, who has struggled to contain union conflicts and their negative impact on economic growth and the public mood.

Pan American normally injects about 6.5 million cubic meters of gas into Argentina's national gas pipeline system from Cerro Dragon daily. The field injects gas into two major pipelines serving smaller towns in southern Argentina but also others all the way up to the city of Buenos Aires.

Pan American produces around 100,000 barrels a day of oil and around 8.7 million cubic meters of gas a day at Cerro Dragon, according to the company's website.

Cerro Dragon is the most important oil and gas field in Argentina and the failure to reestablish full production could shut off heating gas to homes in southern Argentina and eventually reduce gas supplies to the city of Buenos Aires.

Oil production has been shut down at Cerro Dragon and the flow of gas is "precarious," a company official familiar with the situation said Monday.

Pan American had said late Friday the protest would lead to the "total paralysis" of production within 30 hours if workers were unable to enter the field and take emergency measures.

Pan American said the protesters, who belong to a construction workers' union known as "The Dragons," stormed the area early Thursday and destroyed trucks, fiber-optic equipment and critically important monitoring equipment.

The workers, who are demanding higher wages and legal recognition, took over a power generator, putting all of the company's oil and natural gas production in the area at risk, according to Pan American.

The protesters aren't Pan American employees but work as contractors for companies hired by Pan American.

The protesters prevented around 6,700 workers from doing their jobs at the field, Pan American said.

The Cerro Dragon field is more than 50 years old, but it's still the most productive and important in Argentina.

Pan American has invested around $3.5 billion in the field over the past four years. Cerro Dragon is also one of the biggest fields of its kind in Argentina and is more than 15 times bigger than the city of Buenos Aires.

BP PLC owns a 60% stake in Pan American. The remaining 40% is equally split between Argentina's Bridas Energy Holdings Ltd. and China's Cnooc Ltd.

Copyright (c) 2012 Dow Jones & Company, Inc.


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OilyGuy | Jun. 26, 2012
Higher wages and legal recognition;.......these union workers and their puppet masters criminal acts of destroying equipment should get them some "recognition"......... in prison. Another radical union shows its true colors.

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